Should we expect HUF 360/EUR or HUF 400/EUR in 2023?

That is the biggest question concerning a lot of Hungarians these days. The second half of last year saw some historic highs regarding the currency exchange rate of the forint, and many thought we would never see rates starting with number 3 again. However, after the EU deals, the forint started to strengthen, and that trend seems to continue in 2023. Here is how the experts calculate with the Hungarian national currency.

According to mfor.hu, the forint started 2023 well. Its exchange rate has been below 400 for days. The only question is whether that can continue to decrease or not.

In December, the long-awaited deal concerning the EU funds was signed. That means Hungary may get access to billions of euros but not immediately. Some of the development funds will remain closed for even two more years, others may start to heat Hungary’s economy already this year. Furthermore, the government must meet 27 preconditions, so long and hard negotiations are still ahead.

Anyway, the deal itself meant that the market took off the burden of possible EU funds failure from the Hungarian forint. As a result, the forint started to strengthen at end-December. Even though the trend was positive, the numbers were not conclusive. Many expected a stronger forint after the deal was closed.

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Meanwhile, Hungary’s Debt Management Agency issued USD 4.25 billion of bonds a couple of days ago. That is because the EU funds will not come tomorrow, so the administration needs foreign currency to pay the increased energy bills of the country.

However, in that regard, it is good news that energy prices have been falling on the international stock markets recently. Now those prices are lower than when the Russian invasion of Ukraine started.

The experts of the Klasszis podcast of mfor.hu agreed that the forint may strengthen even until 360/EUR in 2023. They added that inflation would be the most influential on that possible strengthening. Barnabás Virág, a deputy governor of Hungary’s National Bank, said that the December inflation was expected to be around 26-27 percent in Hungary. Meanwhile, in the EU, that rate is below 10 percent.

On 13 January, the latest inflation data will be shared by the Central Statistical Office (KSH). The government and the national bank believe the Hungarian inflation will go below 10 percent by end-2023.

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Source: mfor.hu