Árfolyamsávok

Árfolyamsávok is a Hungarian term that translates to "exchange rate bands" or "currency bands." It refers to a monetary policy system where a country's central bank allows its currency to fluctuate within a predetermined range against a reference currency or a basket of currencies. This band has an upper and lower limit, and the central bank intervenes in the foreign exchange market if the exchange rate threatens to move outside these boundaries.

The primary objective of an árfolyamsávok system is to provide a degree of exchange rate stability while still allowing for some flexibility. This stability can help to reduce uncertainty for businesses involved in international trade and investment, making it easier to plan and manage financial risks. It can also contribute to controlling inflation by preventing excessive depreciation of the domestic currency, which would make imports more expensive.

However, maintaining an árfolyamsávok system can be challenging. The central bank must hold sufficient foreign exchange reserves to defend the band, especially if there are strong speculative pressures against the currency. If market forces push the currency too far from its target, the central bank may have to sell its reserves or even adjust interest rates to influence capital flows.

The width of the band is a critical policy decision. A narrower band offers more stability but requires more active central bank intervention and can be more costly in terms of reserve management. A wider band provides more flexibility and allows market forces to play a larger role but offers less predictable exchange rate behavior. The choice between a fixed exchange rate, a floating rate, or an árfolyamsávok system depends on a country's specific economic circumstances, its trade patterns, and its policy objectives.