Hungarian stock market and currency collapse under Victor Orbán’s windfall tax

After the Hungarian Prime Minister, Victor Urban, After announcing a plan to tax extraordinary corporate profits (in the English expression “sudden profit tax”), the shares of the country’s main companies and the local currency – the Hungarian florin – fell sharply.

Hungarian refiner Mol Nyrt is down about 15% this Thursday, having meanwhile slipped 2.93% to 33.48 guilders. In turn, the country’s largest bank, Nyrt Bank, lost more than 13%.

In the foreign exchange market, the Hungarian currency depreciated by 0.8% against the euro, after losing 3.1% against the single currency, the largest decline in two months. Currently, each euro is equal to 391.85 guilders. The country’s central bank met on Thursday, after deciding to keep key interest rates unchanged at 6.45%.

These moves appeared in the markets after on Wednesday, Viktor Orban addressed the country, via a video message, in which he announced that in the next two years, taxes will be imposed on “additional profits” in the sectors of banking, insurance, energy and communications. .

The funds raised will help reduce the prices of public services and reform the country’s armed forces. With this new recipe, Budapest will be able to circumvent the European funding freeze ordered by Brussels.

Orban’s Fidesz party won the April 3 elections with 54% of the vote, giving him a majority of more than two-thirds in parliament for the fourth time in a row, legitimizing his leadership for another four years.