Hungarian forint hits historic high as EU funds may be released – analysts about Hungary’s bright economic future

Uncertainty abounds, yet Péter Magyar’s victory and yesterday’s announcements – including a pledge to join the European Public Prosecutor’s Office – could unlock billions in frozen European Union funds, potentially flooding Hungary with trillions of forints. Little wonder the stock market has surged, with the forint reaching a historic peak. Only firms tied to the Orbán regime are lagging badly.

Forint at record high – but is the rally over?

The euro now buys just 366.6 forints, a level last seen in early February 2022, before Russia’s invasion of Ukraine.

František Taborský, strategist at ING Bank’s London office, predicts further forint strength despite failed Iran talks and today’s US blockade of Iranian ports.

ING sees the euro-forint rate stabilising at 355-360, provided the Middle East conflict eases, according to Economx.

The forint has also rallied sharply against the dollar, at 311.6 forints per dollar – again a rate unseen since early 2022.

Szeretlek Magyarország reports that on the first trading day post-election, shares in companies close to the Orbán era plunged, while OTP and MOL soared. Lőrinc Mészáros’s Opus tumbled to 315 forints from Friday’s 430 close, a 26.7 per cent drop at its nadir. Gellért Jászai’s 4iG fell 18-19 per cent, Granit Bank (linked to István Tiborcz, the prime minister’s son-in-law) shed 4.86 per cent, and Waberer’s lost 3.6 per cent in the first half-hour.

EU billions on the horizon?

Analysts cited by Portfólió hail Péter Magyar’s two-thirds majority as the best news for European markets – and the most EU-friendly scenario. Yesterday, nearly six million Hungarians voted, a turnout unmatched since the fall of communism. Nor has any non-parliamentary party ever secured such a vote tally. Fidesz’s list garnered 2.258 million votes (enough to win elections in the past), but Tisza’s 3.1 million delivered a supermajority mandate.

Foreign analysts say Hungary could tap €6.4 billion (£5.4 billion; 2,348 billion forints) from the EU recovery fund almost immediately, post-reforms – including long-withheld post-Covid aid. In his victory speech, Magyar vowed to restore checks and balances and join the EPPO.

At today’s press conference, the prime minister-designate said he had spoken with European Commission president Ursula von der Leyen about repatriating €20 billion in frozen funds swiftly.

At his today international press conference, Péter Magyar has signalled that his party can commit to anti-corruption measures, bolstering the independence of the authorities, and safeguarding press and academic freedoms in order to rescue Hungary’s €20 billion in frozen funds.

Will the Polish model falter?

Ian Bremmer of GZERO Media argues Tisza’s supermajority could unlock not just EU cash but euro adoption too – a campaign promise enshrined in its manifesto.

Sceptics abound, however. S&P Global, Fitch Ratings, and EU diplomats note that while Poland’s funds flowed post-Donald Tusk’s win, Hungary’s will require deeds, not mere pledges.

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Markets bet on rising Hungarian asset values, banking on a more market-friendly, less confrontational Tisza regime. Liam Peach of Capital Economics in London forecasts lower sovereign risk premiums, a shrinking budget deficit as a share of GDP, and investor return. Swift EU rapprochement could position Budapest’s bourse as a regional leader.

Ebury’s Michał Jóźwiak tips €17 billion in EU funds, plus defence spending boosts – a potent stimulus for the economy.

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