Hungarian forint keeps strengthening, partly thanks to Orbán’s challenger Magyar: here’s why
The Hungarian forint maintained its momentum on Monday, 3 November, continuing the gains seen last week. By mid-morning, the exchange rate hovered around 386.4 forints per euro, marking a two-and-a-half-year high. According to Dávid Németh, chief analyst at K&H Bank, this trend is being driven not only by macroeconomic factors but also by political expectations.
Markets back the Tisza Party, forint strengthens
Németh explained that the market is currently betting on Péter Magyar and the Tisza Party. A potential victory in the spring 2026 elections could trigger a short-term market boost similar to what followed Donald Tusk’s party’s success in Poland. He noted that the forint’s current strength already partly reflects expectations around this possible government change. If the trend continues, the euro could fall below 385 forints by the end of the year, 444.hu reports.
A Tisza Party win could generate positive economic effects through several channels. Firstly, it could reopen access to currently frozen EU funds. Secondly, it might pave the way for a fiscal policy aiming at introducing the euro in Hungary. This would significantly reduce the country’s debt-financing costs, given that the current Hungarian yield spread is over three percentage points higher than Greece’s solely because Greece is a member of the eurozone.
Four possible election scenarios
According to Németh, there are four realistic election scenarios, depending on whether a two-thirds majority is achieved and by whom. A narrow government majority could be perceived as unstable by the markets, especially since any government in the second half of 2026 would face serious budgetary adjustment pressures. Without adjustments, the budget deficit could rise to 6–7% of GDP, signalling an unsustainable economic trajectory.
Németh suggested that state spending should be more restrained or better targeted in several areas. He cited over-expenditure on economic sector support, as well as religious and recreational spending, as areas for potential cuts. Furthermore, he argued that introducing a 14th monthly pension is unrealistic, and that the 13th should be capped at HUF 600,000. He also recommended reviewing full personal income tax exemptions for mothers and 3% subsidised housing loans, as these could pose long-term fiscal burdens.
Significant adjustments needed
The analyst believes that adjustments equivalent to roughly 3% of GDP will be necessary. Half could come from restructuring current measures, with the remainder saved by not implementing promised expenditures. He also expects that margin caps on prices will likely be removed following the elections, around May–June 2026.
Németh does not anticipate significant growth this year, but next year could see some recovery due to a weak base this year and election-related government spending. Investments in Hungary by BMW, CATL, and BYD could have a noticeable positive impact next year. Military spending and public-sector wage increases may boost household consumption, though inflation could accelerate again, from below 3% at the start of the year to potentially above 4% in the latter half.
The Hungarian National Bank is therefore expected to reduce the base rate cautiously, in one or two steps. Investors currently appear to see the short-term prospects of the Hungarian economy as being shaped less by the current government and more by a possible Tisza victory and the accompanying market optimism.
Itś got nothing to do with Magar Peter
### Hungarian Forint (HUF) Strengthening: Why It’s Getting Better
Based on the latest data as of November 5, 2025, the Hungarian Forint (HUF) has indeed been appreciating against major currencies like the USD and EUR over the past year, making it “stronger” (i.e., fewer HUF needed to buy 1 USD or 1 EUR). This is a positive trend for Hungary’s economy, as it reduces import costs, curbs inflation, and boosts purchasing power abroad. However, it’s been volatile short-term—e.g., a slight weakening vs. USD in the last month but a robust +10.36% gain over 12 months.
#### Key Reasons for the Improvement
The HUF’s rally is driven by a mix of domestic policy stability and global factors. Here’s a breakdown:
| Factor | Explanation | Impact on HUF |
|——–|————-|—————|
| **Stable Monetary Policy from MNB** | The Hungarian National Bank (MNB) has maintained a steady base rate (around 6.5% as of late 2025), signaling reliability to investors. This contrasts with earlier rate cuts that pressured the forint. | Attracts foreign capital inflows into HUF-denominated bonds and assets, increasing demand for HUF. |
| **Declining Inflation** | Hungary’s CPI has cooled to ~3.5% (from double digits in 2023), aligning closer to ECB targets. This eases pressure on the currency. | Builds investor confidence; lower inflation expectations support rate stability and HUF value. |
| **EU Fund Thaw** | After delays due to rule-of-law disputes, Hungary received €10B+ in frozen EU recovery funds in 2024–2025, with more inflows expected. | Bolsters reserves and fiscal health, reducing depreciation risks. |
| **Global USD Weakness** | The USD has softened post-US rate cuts (Fed at 4.25–4.5%), while EUR remains steady. HUF benefits as a high-yield EM currency. | Relative outperformance: HUF/EUR up ~5.34% YTD, hitting highs like 0.0026 EUR per HUF in early November. |
| **Improved Risk Sentiment** | Emerging markets (EMs) like Hungary are seeing renewed interest amid global growth forecasts (IMF: 3.2% for Hungary in 2026). Political stability post-elections helps too. | Lowers risk premiums on HUF, encouraging carry trades (borrowing low-yield currencies to buy HUF). |
#### Recent Trends Snapshot
– **vs. USD**: 1 USD ≈ 338 HUF (stable short-term, but +10% stronger YoY).
– **vs. EUR**: 1 EUR ≈ 387 HUF (peaked at ~385 in early Nov, up from 410+ in spring).
– **Outlook**: Analysts (e.g., via Trading Economics) forecast mild further gains if MNB holds rates, but risks include energy prices or EU tensions.
If this isn’t the “it” you meant (e.g., something else like politics or weather), clarify—happy to dig deeper! For live charts, check sites like Trading Economics.
Ronald I checked Trading Economics and here are the real figures:
Year On Year inflation measured as of Sep 25 – 4.3% (not 3.5%)
The Hungarian central bank rate is 6.5% compared to the EU central bank deposit rate of 2% while the ECB “main refinancing rate” is 2.15%. The interest rate differential attracts forint deposits. High interest rates in Hungary are an economy killer. There is nothing whatsoever economically positive going on in Hungary except the fact that Tisza is most likely to win in April. ING posts economic updates on Hungary and the most recent one published yesterday is titled “Monitoring Hungary: Trapped In Stagnation”. They forecast a sticky Hungarian central bank rate as inflation does not improve.
https://think.ing.com/articles/monitoring-hungary-trapped-in-stagnation/