The shell-shocked Hungarian currency, the forint, has been on the canvas and out of the count for the past few months, the victim of – what is kindly called in financial parlance –“unorthodox” policies.
Still, though the Magyar economy and its currency are in a rather unenviable state at present, this is nothing compared to what went on in Hungary in the aftermath of World War II.
In 1946, Hungary experienced the worst case of hyperinflation in history.
Things got so out of control, so fast that the money printers could hardly keep up with the rate at which the value of then currency, the pengő, was declining. The currency denominations had to be spelled out because the number of zeros would not fit on the bank notes.
When it was all said and done in the summer of 1946, Hungary was issuing bills as high as 1 quintillion pengő.
Last month a London bookmaker gave odds of 33/1 that the common currency on the European continent may be no more by the time we welcome in 2012. The new year is a mere three weeks away, but the way events are unfolding in Europe one might argue there still is a prudent, calculated risk in the gamble.
A quick check of Oanda this morning shows that the Swiss franc is worth 35 more cents than it was a year ago at this time — an increase of 36 percent.
Every other major currency one can think of — yen, euro, Australian dollar, Singapore dollar, Canadian dollar, Brazilian real — is also standing much higher compared to the greenback than it was on August 9, 2010.
The franc’s rise, while significant, still pales in comparison to precious metals. Palladium is up 44 percent, gold 87 and silver, despite its ups and downs, has more than doubled in the last 365 days.
Update: The CHF is already up 2.35 cents today against the USD in early morning trading.
If only I had taken that job as King of Switzerland. I would be now be getting paid in the paper currency that seems to hold the most value these days.
The power of the Swiss franc is so great that it has managed to hold an entire nations — nations which are not called Switzerland — under its spell.
In Hungary, for example, where, for some mysterious reason, the majority of home loans in the Noughties were made out in CHF, great swings in the Swiss currency garner more coverage in the Hungarian press than they do in Switzerland — particularly when the franc is heading upwards, which seems to be the only direction it has been headed recently.
Update: Just as these lines are being typed, the Swiss National Bank has decided to take measures to weaken the franc.
For a time last week it appeared the dollar was headed for another end of the month drop against the euro — as has been the case the last seven months.
But no, thanks to a desperate last-minute Congressional agreement to keep the US from defaulting, and the apparent failure of the agreement to convince the markets, the dollar stands higher today than it did a week ago when compared to the euro. Compared the Swiss franc, though …
The USD against the EUR in the last week of the month starting in December 2010
December 27, 2010 0.7618
January 3, 2011 0.7473
January 25, 2011 0.7348
February 1, 2011 0.7330
February 22, 2011 0.7309
March 1, 2011 0.7254
March 25, 2011 0.7080
April 1, 2011 0.7057
April 25, 2011 0.6865
May 1, 2011 0.6751
May 25, 2011 0.7107
May 31, 2011 0.6941
June 24, 2011 0.7016
July 1, 2011 0.69022
July 25, 2011 0.69604
August 1, 2011 0.7020 (latest figure)