The Hungarian forint continues its downward spiral, hitting a two-year low against the dollar and showing no signs of stabilising. With experts predicting that the EUR/HUF exchange rate could weaken to 425 by spring 2025, the currency’s struggles could spell prolonged economic challenges for Hungary.

Nothing stops the forint from falling

As Forbes reports, on Monday, the Hungarian forint weakened further against the euro and reached a two-year low against the dollar, surpassing USD/HUF 406. This decline is likely driven by the dollar’s ongoing strength against the euro, which hit a new two-year high earlier in the day, a trend that often puts pressure on emerging market currencies. Looking ahead, Goldman Sachs predicts the dollar will strengthen by another 5% against the euro over the next year, fuelled by robust US economic growth and President Donald Trump’s tariff policies. This projection spells further challenges for emerging market currencies, including the forint.

2025 predictions

Forbes‘ expert predicted last year that economic challenges in Hungary are expected to persist, with predictions pointing to further weakening of the forint. Blochamps Capital forecasts that the EUR/HUF exchange rate could fall to 425 by spring 2025, driven by limited flexibility in interest rate management despite signs of economic recovery anticipated by autumn 2024. The central bank faces a tough task to stabilise the exchange rate in the next six months, as the forint’s weakness exacerbates inflationary pressures due to Hungary’s heavy reliance on imports. Slowing real wage growth and delayed recovery in consumption add to the economic strain, amplifying the social impact of currency depreciation.

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The Hungarian forint has plummeted to a two-year low against the British pound, with HUF 501.5 required to purchase a single GBP on Monday morning. This is just shy of the all-time record of HUF 502.9, illustrating the domestic currency’s sustained weakness. The euro-forint exchange rate has also breached new lows, with the common European currency trading above HUF 415, marking its weakest performance in two years.

Weakening: Regional and global factors in play

The Hungarian forint’s poor performance extends beyond major currencies, as it also hit unprecedented lows against the Polish złoty and the Czech koruna, Világgazdaság reports. Analysts point to several key factors driving the depreciation. Chief among them is Moody’s recent downgrade of Hungary’s credit rating outlook from stable to negative. This shift, announced late last Friday, has shaken investor confidence, prompting a reassessment of regional holdings.

The downgrade reflects concerns over Hungary’s governance and its potential loss of EU funds, exacerbating fears about the country’s fiscal stability. Simultaneously, global market trends have added to the pressure, with the US dollar gaining strength. The dollar index (DXY), which measures the greenback against a basket of currencies, climbed 0.47%, signalling broad-based demand for safer assets.

Policy dilemma: Balancing rates and stability

Economic experts like Viktor Zsiday, portfolio manager at Citadella Fund, highlight deeper systemic issues. In Portfolio’s article, Zsiday argues that Hungary’s current interest rate policies are insufficient to stabilise the currency. Despite recent rate cuts aimed at stimulating growth, these adjustments have inadvertently fueled the Hungarian forint’s slide.

Zsiday outlines two potential paths forward: continued rate cuts, which risk further depreciation and heightened inflation, or raising rates to attract investors and stabilise the forint. However, both options come with significant economic trade-offs. He also underscores that the root cause of investor apprehension lies in Hungary’s economic policies and political risks, which only the government can address.

Hungarian forint: creator of challenging environments

The weak forint creates a challenging environment for businesses and consumers alike. With Hungary heavily reliant on imports, the currency’s depreciation inflates the cost of goods, fueling domestic inflation. This, coupled with high interest rates, creates a precarious economic environment. Hungary’s monetary policymakers face mounting pressure to restore investor confidence while balancing domestic economic needs. Yet without significant reforms or shifts in fiscal policy, stabilising the forint may remain a distant goal.

At 5 PM, the EUR/HUF exchange rate was above the 415 level with one euro costing HUF 415.07. The GBP/HUF rate had not improved too much by 5 PM, with one pound costing HUF 500.62 at the time of writing this piece. As for the US dollar, one greenback cost HUF 396.73 at 5 PM on Monday.

Read also:

• Moody’s credit rating agency warned Hungary changing outlook to negative
• Forint hits new low against the euro as exchange rate surges past 413
• Hungarian forint hits new 2-year low against the euro, attempts to recover 

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The Hungarian forint has taken a new hit, falling to a record low against the euro following the release of disappointing GDP data. The data paints a bleak picture of Hungary’s economy, showing a slowdown that has once again tipped the nation into a technical recession. According to reports from Portfolio.hu, the euro reached HUF 405.8 by 9 AM today, a level unseen since November 2022.

The latest currency drop follows an overnight spike, where the euro-forint exchange briefly surged to 405.7, setting a fresh low not experienced since January 2023, Portfolio reports. The downturn in the forint coincides with the announcement of Hungary’s third-quarter GDP figures, which revealed an economic contraction and an official return to technical recession status. Analysts are bracing for further fluctuations as additional data from the EU and the U.S. are set to be released, likely impacting market dynamics. For instance, Spanish economic data already spurred a rise in the euro, which in turn saw the forint gain slightly against the dollar.

Shocking GDP data signals technical recession for Hungary

Data from Hungary’s Central Statistical Office confirmed a 0.7% quarterly drop in GDP during Q3, a contraction much steeper than experts had predicted. Forecasts collected by Portfolio suggested only a minor dip of 0.2%.

However, the reality proved far worse, as Hungary’s economy has now experienced back-to-back quarters of decline, putting it squarely back in a technical recession.

On an annual basis, GDP shrank by 0.7% after seasonal and calendar adjustments, and the raw data showed a larger 0.8% decline. For comparison, analysts had expected a modest growth of around 0.3%.

The last time Hungary faced such economic difficulties was during the energy crisis of late 2022. Since then, GDP growth has been inconsistent, with the economy shrinking in six out of the last nine quarters.

Economic Development Minister Márton Nagy had hinted at the likelihood of this downturn, suggesting during the Budapest Economic Forum that third-quarter growth would hover close to zero. This statement from the minister implied an anticipated economic decline compared to the previous quarter, leading market forecasts to be adjusted downwards.

However, today’s release still managed to shock investors, triggering a further plunge for the forint.

Market reactions and fluctuations

Following the release of GDP figures, the forint experienced a sharp decline against the euro, reaching a low point of 405.8, marking a level not seen since late 2022. Amidst the broader landscape of European economic updates, fluctuations in the currency market were noticeable. For instance, Spain’s strong economic performance, along with an unexpected inflation increase in October, bolstered the euro. France also reported better-than-expected GDP figures, prompting optimism around a potential economic recovery in Europe. With the European economy showing signs of life, the European Central Bank may delay interest rate cuts, which could strengthen the euro further against the dollar.

These developments have caused the forint to strengthen slightly against the dollar, with a 0.2% rise bringing the exchange rate to below 374 HUF/USD. However, the forint’s position against the euro remains largely unchanged, reflecting investor caution due to Hungary’s weak economic outlook.

Read also:

• Forint hits new low: Weakest since 2022 amid economic struggles
• Hungarian forint breaks currency exchange level, additional weakening on the horizon

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The Hungarian forint has plunged to its weakest rate against the euro since December 2022, sparking concern among economists. Experts attribute this downturn largely to international factors, including a volatile geopolitical environment, but domestic policies also play a part. The future of the forint may depend heavily on the release of EU funds, though there remains uncertainty about their arrival.

Sharp decline in the forint

The week started poorly for the forint, with the currency hitting a four-month low against the dollar and sliding to HUF 404 per euro by the weekend—the weakest level in nearly two years. Csaba Szajlai, an analyst at Világgazdaság, pointed out in an interview with ATV News that the upcoming U.S. presidential election could influence the euro-forint exchange rate, with a possible Donald Trump victory expected to weaken the euro, while a win by another candidate might stabilise it.

Tensions between Brussels and Hungary’s budget

Economist Csaba Lentner sees Hungary’s ongoing financial struggles with the EU as a primary factor in the forint’s decline, along with the Hungarian National Bank’s current losses totalling around HUF 3,000 billion (EUR 7.40 billion). Lentner believes that Hungary’s absence of EU funding is adding pressure to the currency, stating that the weak Hungarian currency could test the resilience of the economy, especially as the 2026 elections approach. Given the current economic climate, he suggests that the forint could fall as low as HUF 430 per euro.

Trust issues at play

Opposition MP Zoltán Vajda of the MSZP party argues that the Hungarian currency’s persistent decline has deep roots, noting that since 2010, the currency has lost nearly 50% of its value against the euro. According to Vajda, government actions have eroded investor confidence, worsening the currency’s situation. He added that if Hungary had already adopted the euro, people would no longer need to worry about the forint’s day-to-day volatility.

While both global events and government financial policy are weighing on the currency, experts caution that only short-term measures might bring any stabilisation. In the long term, however, a more substantial recovery for the Hungarian currency remains uncertain.

UPDATE: EUR/HUF exchange rate reaches 405

The forint fell to a new low on the second day of the week, hitting 405.231 on Tuesday at around noon, Economx reported. It then went back below 405 then reached that level again after 2 PM.

Read also:

• Hungarian forint breaks currency exchange level, additional weakening on the horizon
• Addressing Budapest’s housing crisis: Proposal to restrict home purchases by non-EU nationals

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