Grave trouble ahead: the forint is the biggest casualty of Trump’s war, with brutal food inflation looming

And where is the end in sight? The American president previously spoke of a campaign against Iran lasting just a few weeks; now he avoids mentioning any timeframe. NATO allies are dragging their feet over breaching the Strait of Hormuz, the Americans appear too thin on the ground for the operation, and Iran shows no sign of collapsing. Meanwhile, the war’s biggest loser so far is the forint.

Unseen food inflation threatens

Just a few weeks ago, the Hungarian National Bank, under Mihály Varga, cut its base rate to stimulate the economy ahead of elections and pump money into investments. But with the Trump-led United States attacking one of the world’s largest oil producers—and a nation poised to seize control of the Strait of Hormuz—four weeks ago, those efforts were put on ice. Soaring energy, fertiliser, food and fuel prices could even spell defeat for Trump’s allies in America’s midterms, though their effects will hit Hungary first.

The Hungarian government reacted swiftly, reimposing fuel price caps. Yet for food prices rocketing due to fertiliser shortages, this offers no medium-term fix. Adding insult to injury, Russia—exploiting the crisis—announced last week that it would restrict nitrogen fertiliser exports until 21 April.

Forint among the chief losers

It now takes 390 forints to buy one euro—a sharp depreciation, given that the rate lingered below 374 at the end of February, before Trump’s war. True, it flirted with 400 from below in early March.

According to Portfolio, markets are now pricing in a conflict dragging on for months, not weeks. Investors are piling into classic safe havens like the dollar, whose value keeps climbing. Winners also include the untouched Chinese yuan, Swiss franc and Japanese yen.

European currencies are among the losers, as the continent relies heavily on imported raw materials and energy. Emerging-market currencies are taking the brunt, with the forint out in front. Regional peers are weakening too, but neither the Polish zloty, Czech koruna nor Romanian leu can catch it. Indeed, the leu has held up marginally better against the euro.

If you missed our previous articles concerning the forint:

• The Hungarian forint is depreciating at a startling pace: how much further might it weaken?
• New forint coins honour Hungarian astronauts – visuals