Hungarian forint at multi‑year high against euro and dollar: could it gain another 10% in April?

The forint has strengthened markedly, and even the news that yesterday Governor Mihály Varga announced a cut in the central bank’s base rate after 1.5 years did little to dent the trend. Pro‑Fidesz papers attribute the move to Trump and a forthcoming peace, while other experts point to yesterday’s Medián poll favouring Tisza. Of course, a combination of these factors could be behind the forint’s strength.

The forint keeps marching higher

Whatever the overall picture, the forint is in superb shape against the euro, the American dollar, and regional currencies. Világgazdaság notes it is at a two‑year high versus the Czech koruna and the Polish zloty, a four‑year high against the Romanian leu, and a four‑year high against the dollar; against the euro, it sits at a two‑and‑a‑half‑year peak.

According to Világgazdaság, the forint’s astonishing weakness in 2022 was born of the war in Ukraine and, as they see it, the subsequent energy crisis. As a result, the drivers of the forint’s strength are:

• the election of Trump and Washington’s commitment to Ukraine peace;
• the strengthened credibility of the central bank under Mihály Varga, making yesterday’s base rate cut beneficial for the economy and financial markets.

Will the forint strengthen or weaken if Tisza wins?

Government‑close Világgazdaság argues that a Tisza victory would not help the forint at all; on the contrary, it might hurt, given that an inexperienced coalition would lead the country and would not be expected to bolster the forint via higher government bonuses.

Portfolio agrees that Varga’s cautious, data‑driven rate‑cutting approach is supportive of the Hungarian currency, but attributes a far more significant positive role to the possible accession of Tisza to government. On the one hand, Tisza could bring home up to EUR 20 billion (about HUF 7,500 billion) in EU funding, and on the other, the party has repeatedly signalled its intention to introduce the euro if it comes to power, the paper notes. Orbán stated multiple times that he would not like to introduce the euro in Hungary.

Bank of America and Barclays analysts have even taken it further, suggesting that a Tisza victory could push the forint up by as much as 10%, whereas a further Orbán‑led government would likely see the opposite effect.

Yesterday’s Medián poll also factors in

According to 24.hu, part of the current forint strength may be explained by Medián’s release yesterday showing Tisza leading Fidesz by 20 percentage points among certain party supporters, the largest such lead observed to date. Orbán and co. dismissed the results as ridiculous, but political scientist Gábor Török says that if Medián is not overstating the case, it would mean Magyar Péter’s party would win two‑thirds of the new National Assembly.

• New poll: Orbán should brace for crushing defeat as Péter Magyar eyes constitutional rewrite

The Medián result was mirrored quickly by government‑aligned Nézőpont Intézet, which reported a 5% Fidesz lead. While most greeted that result with a wry smile, the trend is clear even at Nézőpont: Fidesz weakness and Tisza strength persisting despite government largesse.

If you missed our previous articles concerning the Hungarian forint:

• Hungarian currency guide: Everything visitors and expats need to know about money in Hungary
• Poll-leader Péter Magyar makes historic pledge on the Hungarian euro introduction

Featured image: depositphotos.com