The Hungarian central bank continues to suffer heavy losses

According to the central bank's half-yearly report published on Tuesday, the MNB's results improved in the first half of this year, as the central bank posted a loss of 'only' HUF 248 billion, compared to HUF 386.2 billion a year earlier. Interest income increased significantly, with last year's loss of HUF 435.2 billion reducing to HUF 257.4 billion, thanks to interest rates being higher than the current level of 6.5% in the first half of 2024 (the base rate was cut to this level in September last year).

The result of financial operations also improved, showing a loss of only HUF 0.6 billion. At the same time, profit on foreign exchange rates fell to HUF 43.2 billion from HUF 93.1 billion. The last time a lower profit was reported in this area was in the second half of 2023.

This is clearly the effect of the stronger forint exchange rate.

The MNB is seeking to exchange foreign currency reserves acquired at a lower average exchange rate for currency at a higher market rate, in line with the state's needs. Put simply, a stronger currency reduces the central bank's exchange rate gains.

Following this latest loss, the MNB's negative equity has increased to HUF 1,833.4 billion, primarily as a result of the high interest rate environment in recent years.

In the coming days, Portfolio will publish a detailed analysis of the MNB's results, in which we will also examine the outlook.

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