Trend change to come after forint strengthening, experts say

The Hungarian forint reached a historic low against the euro and the American dollar in 2022, following the Russian invasion of Ukraine. The Hungarian National Bank intervened to baulk further weakening. As a start, it raised the base interest rate sky-high. After that, they started an interest rate cut programme, and the forint began to weaken again. The trend change happened at the beginning of January, but experts agree that a new weakening is on the horizon.

Forint strengthened in January, February

According to G7, a Hungarian economy-focused news outlet, the Hungarian forint strengthened against the euro and the American dollar from the beginning of January. On the first Monday of this year, one euro cost HUF 416; now, the exchange rate is above 402. One USD costs HUF 403 in the first days of the new year. Now, it stands at HUF 385. The Swiss Frank’s exchange rate was 443; now it is JUST above 426.

Based on G7, the Hungarian forint depends largely on the international gas prices, which decreased on Thursday. A senior analyst of Concorde, Sándor Jobbágy, told G7 that a ceasefire and the restart of trade between the parties concerned in Ukraine would do good for the forint. However, that will not happen in an instant, even if the documents are signed.

Forint weakening expected

Mr Jobbágy highlighted that the Hungarian government calculated a 397.5 currency exchange rate in their 2025 budget. The weakening of the forint increases Hungary’s state debt since 29.4% is in foreign currency.

Mr Jobbágy and another analyst of Concorde, Bertalan Nagy, also said that the forint would weaken because of the uncertainties of the state budget, the higher-than-expected inflation (5.5% in January) and the struggling Hungarian industrial sector and economy. Mr Jobbágy said that, due to the higher inflation, the Hungarian National Bank is not expected to decrease the base interest rate. Gábor Regős, leading economist of Gránit Asset Management, said he did not expect the national bank to cut the interest rate until November. Therefore, a weakening forint trend is expected.

Világgazdaság wrote that a possible ceasefire and peace talks could have the most significant influence on the exchange rate of the forint. Continuing the war would weaken the Hungarian currency.

Construction sector output falls 4.2pc in December, says MTI

Output of Hungary’s construction sector fell 4.2pc year-on-year in December, data released by the Central Statistics Office (KSH) on Friday show. Output of the buildings segment slipped 1.0pc and civil engineering output declined 10.2pc. In absolute terms, construction sector output reached HUF 901bn in December. The buildings segment accounted for 67pc of the total.

In a month-on-month comparison, construction sector output edged up 0.7pc, adjusted for seasonal and workday effects. Order stock was 15.7pc higher at the end of December than twelve months earlier. Buildings segment orders inched up 2.7pc, and civil engineering orders jumped 24.9pc. New orders slipped 9.4pc during the period. New orders in the buildings segment fell 5.2pc, and new civil engineering orders dropped 15.1pc. For the full calendar year, construction sector output edged down 0.4pc.

Read also:

• Rapid appreciation: Hungarian forint surges to 4-month high against euro and dollar – read more HERE
• Hungarian media: too expensive Hungarian forint coin may be withdrawn

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