Hungary’s central bank decided this week that pegging its currency to the euro was a no-win proposition and the forint will now be allowed to float rather than to trade in a narrow band. This is wonky economic news that probably won’t get many people excited, but it’s and interesting sign and could be good news for travelers who would like to see Hungary remain cheaper than Western Europe.
Basically, they decided that inflation was getting out of control and the only way to get some control over that was to decouple from the unnaturally strong euro. Even the most optimistic leaders don’t expect Hungary to adopt the euro until 2014 at the earliest anyway, so what’s the rush? People have to live on more than goulash and Hungarian wine you know!
This inflation issue will probably keep boiling up in other countries too. A Wall Street Journal article says Latvia’s inflation is running at 15 percent and it’s close to 6 percent in the Czech Republic. Bulgaria, another of The World’s Cheapest Destinations, is in warning status with ratings agencies. So if you’re hell-bent on heading to Europe this summer, head east!