Among the region’s currencies, the Hungarian forint lost the most value in 20 years

Since 2004, the Hungarian forint has lost half of its value against the euro, while the Polish zloty, for example, has remained stable and the Czech koruna has even strengthened.

Over the past two decades, the exchange rate between the Hungarian forint and the euro has typically moved according to inflation differentials between Hungary and the eurozone, according to GKI Economic Research Co.

The year 2023 broke the pattern, with inflation in Hungary significantly higher than in the euro area, but the forint still managed to strengthen. The main reason for this, according to the GKI, is that the central bank set a high benchmark interest rate to counter inflation, and the favourable yields attracted investors, strengthening the currency, Telex reports. This trend is a loss for domestic exporters, which could also weaken export-oriented industrial production.

Changes in the euro-forint exchange rate over the last 20 years

GKI published an analysis looking at the euro-forint exchange rate from a historical perspective, reviewing the 20 years since EU accession. They wrote that the exchange rate remained relatively stable in the first four years after Hungary’s accession to the EU until 2008 when the financial crisis changed the situation and brought a sharp depreciation of the currency. The forint weakened by 12 percent against the euro in a year, and the central bank started to devalue the currency.

The aim was to attract capital investment, but at the same time, it also increased the attractiveness of working abroad for Hungarians and spending holidays in Hungary for tourists. On the flip side, it became more expensive for Hungarians to go on vacation abroad, and it became more expensive for the general public and the corporate sector to buy imported goods.