Forint’s freefall: The dollar and euro take a toll on Hungary’s economy
The Hungarian forint is facing significant challenges, continuing its rapid depreciation against both the euro and the dollar. On Monday, the forint hit a two-year low against the dollar, while the euro also reached a record high, fueled by global economic factors and U.S. fiscal policies under Donald Trump. This decline comes at a time when Hungary’s economy is entering a recession, putting further pressure on the forint. With low interest rates and international market instability, the currency’s future remains uncertain, raising concerns about the extent of its weakening.
The Hungarian currency is facing a severe depreciation, hitting alarming lows against both the euro and the dollar. On Monday afternoon, the euro surged to a two-year high, reaching over 411 forints, before slightly retracing to around 410, Telex reported. This marks a continuation of the steep decline that began in late September, with the Hungarian currency also hitting a historic low against the Polish zloty, according to Portfolio.
The U.S. dollar is performing exceptionally
The forint’s weakening is largely tied to the robust performance of the U.S. dollar, which has reached a six-month high against the euro and a two-year peak against the Hungarian currency. The dollar’s rise, particularly in the wake of Donald Trump’s victory, is driven by expectations of expansive fiscal policies, which may generate inflationary pressure and force the Federal Reserve to maintain high interest rates. This strengthens the dollar, especially in a global economic environment where most countries are cutting interest rates to revive their economies.
The euro’s weakness is not solely due to the dollar’s strength. The ongoing challenges within the Eurozone, including concerns about Germany’s sluggish economy and the potential impact of Trump’s planned tariffs, are also weighing heavily on the euro. These tariffs are expected to reduce demand for European goods, diminishing the euro’s appeal among investors. Furthermore, the political instability in Germany under Chancellor Olaf Scholz’s leadership is further undermining confidence in the Eurozone.
Very few encouraging signs for the forint
For Hungary, the strong dollar presents a major challenge. The U.S. currency’s dominance often leads to a pullback of capital from emerging markets, including Hungary, as investors seek the safety and high yields of the U.S. economy, Világgazdaság explains. On top of this, Hungary’s domestic economic situation is not helping the forint. Recent GDP data show the Hungarian economy has entered a recession, leading to expectations of looser monetary policies. While lower interest rates may help stimulate the economy, they also weaken the forint further.
With the forint now at a two-year low against the dollar, touching 385.88 forints per dollar, questions arise about the future of Hungary’s currency. The Hungarian National Bank (Magyar Nemzeti Bank, MNB) faces a delicate balancing act, as further rate cuts may risk even steeper depreciation of the forint, without any clear exchange rate targets to guide its decisions. The currency’s value is poised to remain volatile, as both international and domestic factors continue to push it downward.
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Featured image: depositphotos.com
There is more incentive than ever for Hungarians to convert whatever forint savings they have into euros or dollars and keep that money in accounts outside the country out of the reach of Fidesz. People have been doing that forever but there is a sense of economic collapse now that we didn’t have before and the stampede out of the forint will become self-reinforcing . Everything that is imported is going up in price. If Fidesz loses the next election the forint will likely rally big time but 2026 seems so far away.
This must be one of the Mr. Trump election benefits our Politicians are talking about?
Protectionism and isolationism leads to more trade and economic growth – it is known. Go on. Look it up!
NOTHING can STOP this PATH to Economic & Financial – Ruination, through the FAILINGS – over 16 years, of this Orban – Fidesz Government.
Government Debt alone just GROWS daily and to think a “rabbit” will be pulled out the Hat, by the humongous FAILURE – as a Minister of Finance – Mihaly Varga, that the Central Bank of Hungary – any “fresh air” from them, to stabilize the Hungarian cataclysmic COLLLAPSE – is an IMPROBABILITY.
Orban – the Fidesz Party have FAILED us.
WORSENING times ahead.
The forint is the second worst performing emerging market currency after the Chilean peso. The economy is in a Catch 22 situation. With the economy in recession you need interest rate cuts and Hungary’s central bank rate is tied with Romania for the highest in the EU. You can’t cut interest rates, however, when your currency is plummeting. Government provided growth projections for the economy are completely outside of reality. Anything imported that is priced in euros now costs 3.2% more than it did a month ago. Hungary is in real trouble heading for stagflation.
@Larry – I gave up and now I bill my clients in Euros … Tellingly, no raised eyebrows.
Yes let’s bring the socialist back into power. At least the will pretend that everything is great and censor anything that doesn’t fit their narrative.
Worked wonderfully so far for Europe. 1.3% growth over the past 24 years. Impressive
Reading the (5) comments above, I have NO objection nor reason(s) to “challenge” dispute what is the contributors.
I AGREE.
My-self, and in ALL probability being a commentator to this platform, have “positions” opinions – see the ‘Forest through the Trees” – reason(s).
Hungary – is in cataclysmic DOWNFALL.
The “Guilt” – in gargantuan, factual – that ALL through his position, over 16 years – this “Crushing” of Hungary the nadir – the RAMIFICATION(s) – state of a country nearing, on the “cusp” of total COLLAPSE – the name being Victor Mihaly. Orban – DEVILISH.
Millions upon MILLIONS of Hungarians – quality of LIVE – the NEED’s of there LIVES – just on this Humanitarian or Christian REASPONSIBITY – this “Heinous” individual – has RUINED.
Crestfallen – but for those ‘Less Fortunates” – Hungarians – and those of us “blessed” to have STABILITY in our lives, no greater nor IMPORTANT time exists, that in SOLIDARITY in our MILLIONS, from whatever “station in life” place in society we occupy – we, the citizens MUST in SOLIDARITY push or “hurl ourselves” into the “bringing down” of this Orban led Fidesz Government of Hungary.
Why so many people complaining? Orban said in 2025 Hungarians will be making 2500 euros per month. Do the math!🤣🤣🤣