forint

Hungarian forint continues its freefall, faces two-year low against USD

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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January 13, 2025

Will the long-awaited adoption of the euro in Hungary remain a dream?

Despite committing to adopt the euro upon joining the EU, Hungary continues to struggle with meeting the eurozone’s stringent criteria. With challenges ranging from budget deficits and public debt to inflation and rising interest rates, the euro in Hungary remains a distant dream, overshadowed by the enduring forint.

Struggling to meet eurozone criteria

As Pénzcentrum writes, Hungary committed to adopting the euro upon joining the European Union but has struggled to meet key eurozone entry criteria. The Institute of Economic Research recently assessed Hungary’s progress, highlighting mixed results. From 2004 to 2011, Hungary’s budget deficit consistently exceeded the 3% of GDP requirement, though fiscal discipline between 2012 and 2019 allowed compliance. However, the COVID-19 pandemic reversed this trend, with deficits exceeding the threshold until 2023, stabilising around 5% by 2024.

Public debt, another critical metric, remained far above the 60% of GDP guideline until 2012, despite a temporary improvement driven by pension fund nationalisation. While low interest rates aided a gradual decline in the debt ratio pre-pandemic, the crisis caused a sharp increase, leaving public debt levels stagnant since 2017. Meeting these benchmarks remains a significant challenge for the euro in Hungary.

Inflation makes matters worse

Inflation has also posed challenges to Hungary’s adoption of the euro. Before 2012, domestic price growth consistently exceeded the eurozone’s price stability criterion. Between 2014 and 2016, Hungary managed to align with the standard, aided by artificially suppressed utility costs. However, after 2016, while inflation remained close to the Hungarian National Bank’s 3% target, low euro area price growth made meeting the criterion difficult. Following a period of record-high inflation in Europe, which began to ease in 2022-2023, Hungary’s inflation stabilised near the reference value by late 2024, marking progress towards meeting this key requirement for introducing the euro in Hungary.

Euro in Hungary remains a distant dream

Hungary’s long-term interest rates have also fallen short of the Maastricht criteria for adopting the euro. While domestic rates consistently exceeded the allowed margin until 2012, the period between 2014 and 2020 saw compliance, thanks to favourable lending conditions. However, rising global and domestic rates since then have placed Hungary outside the threshold. By 2024, high interest rates and persistent budget deficits have moved the country further from euro adoption. Despite past opportunities, such as joining the ERM II in 2014, current economic policies suggest the forint will remain Hungary’s currency, delaying the potential benefits of the euro in Hungary.

euro exchange rate — Photo: depositphotos.com

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January 13, 2025

Currency concerns: Is the EUR/HUF 500 exchange rate approaching in Hungary? – Here’s what the experts say

The Hungarian forint continues to grapple with a weak exchange rate, following a turbulent 2024 that saw its value plummet by over 10% against the euro. With global economic shifts and domestic uncertainties in play, analysts warn of further challenges ahead, while holding out hope for potential surprises that could reshape the forint’s trajectory this year.

Forint faces continued pressure

As Pénzcentrum writes, the Hungarian forint faced a challenging 2024, marked by a significant weakening of its exchange rate against major currencies. Starting the year at 382 EUR/HUF, it depreciated to over 412 EUR/HUF by December—a drop exceeding 10% within 12 months. This trend continued into early 2025, with the euro exchange rate rising by an additional two forints on the year’s first trading day, while the forint hit a two-year low against the dollar. Despite these setbacks, economic analysts consulted by Pénzcentrum have provided cautious reassurance. While the 500 EUR/HUF exchange rate seems unlikely this year, they stress the importance of monitoring global political shifts and currency trends closely, as further fluctuations in the exchange rate remain possible.

Global influences and domestic issues

The Hungarian forint faced a turbulent 2024, depreciating significantly against major currencies, with external factors playing a key role. Senior Analyst István Madár from Portfolio highlighted that the exchange rate pressures stemmed from global influences, such as the resilience of the US economy in a high-interest rate environment and Donald Trump’s aggressive trade policies, which are set to bolster the dollar and weaken emerging market currencies like the forint.

Domestic issues, including economic uncertainties, EU funding disputes, and high debt burdens, further compounded the forint’s underperformance, particularly against regional currencies like the Polish zloty. While forecasts suggest the forint may face continued weakening, analysts note that much of the negative outlook is already priced in, raising the potential for positive surprises in the exchange rate, particularly if economic or political conditions improve unexpectedly.

Expert’s prediction

The Hungarian forint’s exchange rate remains a focal point as 2025 unfolds, with Zoltán Árokszállási, Director of MBH’s Centre for Analysis, highlighting key influences. Despite a current account surplus, a meaningful real interest rate of 6.5%, and declining public debt, the forint continues to struggle, with the euro exchange rate exceeding 410 forints early in the year. Factors such as US tariffs impacting Hungarian exports and the Federal Reserve’s interest rate policies, which support a strong dollar, are adding pressure to the forint.

Árokszállási predicts that the forint is unlikely to strengthen significantly, with annual averages expected around 405–415 forints per euro, and a return below 400 deemed improbable. With inflation risks tied to further weakening, Hungary’s central bank is expected to remain cautious, limiting the scope for additional interest rate cuts to stabilise the exchange rate.

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January 11, 2025

New Hungarian real estate trend: Slowly shifting to euro pricing?

Foreign-buyers-reappear-in-the-Hungarian-real-estate-market Hungarian real estate market

The Hungarian real estate market is increasingly embracing euro pricing, especially for high-value properties in prime areas like Budapest’s city centre. As the forint weakens, sellers and investors are turning to the euro for stability in transactions.

A growing preference towards euro

As Pénzcentrum reports, The rise of euro-based property ads in Hungarian real estate has been linked to the forint’s weakening exchange rate. Experts, including Zsuzsa Lipták of zenga.hu, note that sellers increasingly favour euro-paying buyers, even when prices are set in forints, particularly in high-value areas like Budapest’s city centre and the Buda Hills. Some developers are now pricing properties exclusively in euros, a trend also seen in sectors like car sales. While the euro isn’t the country’s official currency, its growing use in Hungarian real estate reflects the challenges posed by the forint’s instability.

Spontaneous euroisation Budapest rent prices property market prices exceeded property in hungary renting in Hungary news rental — Photo: depositphotos.com

Pricing properties in euros

In the Hungarian real estate market, the trend of pricing properties in euros is becoming more prominent, particularly for high-value and luxury properties. According to Ferenc Máté, Deputy CEO of Duna House, 3% of current property listings are advertised in euros, with most over EUR 100,000. Due to the forint’s instability, sellers are increasingly favouring buyers willing to pay in euros, even if the original price is set in forints.

While euro-based rentals are more common for luxury apartments in prime areas, such as Budapest’s city centre and Buda Hills, they are less frequent in the wider rental market. This shift highlights the growing preference for the stability of the euro. However, experts suggest it remains more typical for high-end properties, with standard apartments still predominantly priced in forints. The trend also reflects changes in buyer behaviour, with foreign buyers and those in the western regions of Hungary more likely to encounter euro-based transactions.

Rent prices in Budapest reached a psychological barrier Budapest's rental market — Source: depositphotos.com

High-end homes in Budapest

The Hungarian real estate market isn’t showing a strong shift towards euro pricing just yet, according to ELTINGA. Their data highlights that euro pricing is mainly seen in smaller, high-end developments in central locations. The latest Budapest Housing Market Report notes that only six residential projects in the city currently advertise prices in euros or factor in exchange rate changes between the euro and forint. These projects are in sought-after areas of Budapest’s 2, 7, 11, and 12 districts, including Endrődi38 Residence, Limetree Residence, Essence of Gellért, Eötvös12 Villa Park, and Diana Condominium. However, these developments represent just a tiny fraction of the overall new-build housing supply in the city.

What about rentals?

In the Hungarian real estate market, around 15% of rental properties are advertised in euros, while euro pricing is far less common for properties listed for sale, according to Zsuzsa Lipták, managing director of zenga.hu. Among homes for sale in euros, 26% fall between EUR 200,000 and EUR 500,000, while 33% are priced above EUR 500,000—making these two categories 60% of the market. For rentals, 40% are listed at EUR 200–500, with nearly 30% advertised at EUR 1,500 or more.

Investors often calculate in euros, but Hungarian sellers tend to prefer forints, partly due to the complexity of euro transactions and the need for specialised accounts. Some rentals to foreign tenants, paid in euros, remain off the books, contributing to the grey market. The number of euro-priced listings surged in October and November, likely tied to euro exchange rate fluctuations, with high-end properties seeing the most growth.

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January 10, 2025

Skyrocketing fuel prices in Hungary: Among the most expensive in the region – again

Hungarian drivers have been hit with another wave of fuel price hikes as the new year begins. Both petrol and diesel prices have surged significantly, with 95-octane petrol reaching an average of HUF 631 (EUR 1.52) per litre and diesel climbing to HUF 651 (EUR 1.57). Compared to a year ago, these prices reflect a 12% and 9% increase, respectively, while even within the past week, prices have risen by over 2%.

According to 444.hu, the price surge is attributed to a combination of factors, including a sharp increase in excise taxes and the weakening of the Hungarian forint against the US dollar, which has reached a two-year low.

Regional comparison highlights the price disparity

A report by Holtankoljak.hu underscores Hungary’s prominent position in the region for high fuel costs. For diesel, Hungary is second only to Serbia in terms of expense. Regarding petrol, Hungary ranks third, trailing only Serbia and Slovakia, in a tight competition with Austria and Croatia. The dramatic rise in prices places Hungary among the most expensive countries for refuelling in Central Europe, a stark contrast to neighbouring countries where fuel prices remain comparatively lower.

A lack of updated official data

444.hu’s fuel price comparisons rely on data from Holtankoljak.hu due to the absence of fresh updates from Hungary’s Central Statistical Office (KSH). Its experimental fuel price comparison project, launched last spring, has not been updated since April 2024. With fuel costs straining household budgets and business operations, Hungary’s drivers face the unfortunate reality of some of the highest prices in the region—a situation exacerbated by economic challenges and government policies.

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January 8, 2025

Is the Hungarian economy set to revive in 2025 after years of stagnation?

After two years of stagnation, the Hungarian economy looks poised for recovery in 2025, driven by wage growth, government initiatives, and increased investment. However, challenges like external demand and currency stability remain. Here’s what the experts say.

Tough years behind

As VG reports, the Hungarian economy has faced significant challenges over the past two years, with an energy crisis, soaring inflation, and weakened consumer confidence severely impacting growth. Companies scaled back production and investment as public caution persisted, while external demand offered little relief, exacerbated by Germany’s recession. Domestic growth faltered, with GDP growth in 2024 falling below 1 percent—far short of the government’s optimistic 4 percent projection. However, as inflation eases and economic conditions stabilise, there is growing optimism that the Hungarian economy may finally regain momentum in 2025, leaving behind a period of stagnation and underperformance.

Economists and PM Orbán are hopeful

The Hungarian economy enters 2025 with renewed optimism after two challenging years. Zoltán Árokszállási, Head of MBH Bank’s Analysis Centre, highlights factors such as wage increases, enhanced family tax credits, and government programmes stabilising investment as key drivers of consumption and growth. While external demand remains uncertain, with limited support expected from the German economy, a surge in automotive investments from major players like BMW and CATL could strengthen the Hungarian economy in the latter half of the year. Prime Minister Viktor Orbán emphasised fiscal improvements and strategic investments as “hidden resources” poised to bolster GDP growth, which experts predict could reach 3 percent in 2025. In an interview with Patrióta, he said:

The Hungarian economy will not perform well because European performance improves. It will be good even if it does not. Because we have two well thought-out, hidden and now unearthed resources.

Growing wages to fuel the economy

Dániel Molnár, a macroeconomic analyst, anticipates significant wage growth of up to 9% under a three-year wage agreement, with real wage increases exceeding 5% as inflation stabilises within the central bank’s tolerance band. This, coupled with government measures such as enhanced family tax credits and bond interest payments, is expected to bolster consumption and improve consumer confidence. Investment is also set to rebound, supported by the Sándor Demján programme for SMEs and new housing construction initiatives. Additionally, production launches at factories like BYD, CATL, and BMW are expected to strengthen exports and contribute to economic growth. While the Hungarian economy has favourable internal dynamics, sustaining growth above 3% will depend on improved external conditions and eased geopolitical tensions.

Will the forint finally stop weakening?

The Hungarian economy is expected to maintain relative stability in 2025. As experts say, the forint is unlikely to weaken significantly. However, the euro is not anticipated to drop below 400 forints consistently, according to Zoltán Árokszállási of MBH Bank. Interest rates may see modest reductions, but the pace of cuts will depend on global trends, particularly the US Federal Reserve’s monetary policy. The Hungarian National Bank (MNB) is expected to closely monitor the forint’s exchange rate to prevent inflation from exceeding its target range. Current projections suggest a base rate of 5.75% by year-end, though adjustments could be made based on market conditions. Exchange rate and interest policy stability will be crucial for the Hungarian economy’s continued recovery.

forint euro money average wage — Source: depositphotos.com

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January 7, 2025

From 377 to 416: How the Hungarian Forint’s decline defined 2024

The weakening of the forint in 2024 was a significant economic event in Hungary. The exchange rate against the euro began the year at 382 forints and weakened to 410 forints by the end of the year, marking a depreciation of 7.3%.

According to Index, the best exchange rate was recorded in January (377.1 HUF/EUR), while the worst occurred in December (416.4 HUF/EUR). This trend has raised serious questions regarding the macroeconomic fundamentals of the economy and developments in the foreign exchange market.

HUF 10000 Hungarian banknote forint — Photo: depositphotos.com

The role of macroeconomic fundamentals

The weakening of the forint cannot be explained solely by macroeconomic fundamentals. Although inflation eased to 3.7% and the current account turned positive, these factors alone should have strengthened the forint. The budget deficit, while less than ideal, likely remained at the planned level of 4.5%, which does not justify such a large depreciation of the exchange rate. Despite underperforming expectations, the economy grew by 0.6%, which also fails to explain a drastic depreciation of the forint.

Speculative attacks also contributed to the weakening of the forint’s exchange rate. According to data from the Magyar Nemzeti Bank (MNB), foreigners’ positions against the forint increased significantly in October, exerting downward pressure on the exchange rate. Currency market movements were further influenced by the rising electoral prospects of US President Donald Trump. Campaign promises, such as protective tariffs and stimulus measures, led to a stronger dollar and a weaker euro, placing additional strain on the forint.

Monetary policy and the interest rate environment

The Magyar Nemzeti Bank continued to ease monetary policy in 2024, reducing its key interest rate from 10.75% at the beginning of the year to 6.5%. While this might have strengthened the forint in line with market expectations, the narrowing interest rate differential and the looser policy stance of regional central banks failed to provide adequate support. Hungarian interest rates also lost relative appeal in the context of policy decisions by the Federal Reserve and the European Central Bank, further weakening the forint.

The exchange rate of the forint has been significantly affected by political and geopolitical factors. Conflicts with the European Commission, the withholding of EU funds, and developments in the Russian-Ukrainian war have all weakened the Hungarian currency. Export trends and the performance of the German economy have also played a key role, as Hungary remains heavily dependent on demand from the German market.

What to expect from 2025

The outlook for 2025 is fraught with uncertainties. The Russian-Ukrainian conflict, the normalisation of relations with the European Union, changes in monetary policy stances, and the international economic environment could all play decisive roles. The policies of the new central bank governor and the promise of a stable exchange rate are also likely to influence the fate of the forint.

The weakening of the forint in 2024 resulted from a complex interplay of economic, political, and market factors. While macroeconomic fundamentals do not justify the significant depreciation of the exchange rate, speculative attacks, international monetary developments, and the geopolitical situation have all contributed. Stability in the coming years will depend on the convergence of internal and external factors, which will be crucial for the Hungarian economy.

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January 6, 2025

The American dollar broke a new psychological barrier against forint

PM Orbán talked about a fantastic 2025 concerning the country’s economy and economic growth, but it seems markets do not share his optimism. For example, the American dollar broke another psychological barrier against the forint, while the euro continues to strengthen against the Hungarian national currency.

Gradual forint weakening

According to the Hungarian News Agency, “the forint traded at 415.56 to the euro around 5:30 on Friday evening, softening from 413.64 late Thursday. The forint edged up to 403.53 from 403.67 against the dollar. It slipped to 443.71 from 442.37 to the Swiss franc.”

On Friday, the euro traded at 416.01, which is not far from the 2-year historic low of 19 December 2023. Furthermore, it is not far from the 423.8 low of 8 October 2022. What’s even more troubling is that the forint’s weakening against the common currency has been gradual in the last few months, as you may check out below:

Forint weakening against the euro American dollar — Source: Google

Hungary’s 2025 state budget was calculated with a 397.5 EUR/HUF currency exchange rate.

The American dollar broke a new psychological barrier

The strengthening of the American dollar is also gradual, and on 2 January, it broke another psychological barrier, exceeding 400 USD/HUF. Now, it is trading at 403.24/USD. The historic low was also on 8 October 2022, when the American currency cost 435.57 forints. This week, its maximum was at 405.093.

American dollar broke psychological barrier — Source: Google

According to 444.hu, there are multiple reasons behind the weakening of the forint. Some of these are the low Hungarian base rate, the slow Hungarian economic growth, the high budget deficit, the Orbán cabinet’s clashes with the EU, and the lost EU funds. According to Portfolio, the Hungarian economy’s only hope is Trump, who may turn the global economy upside down with new and increased customs and protectionist measures.

There are no regional reasons behind the forint’s fall since it fell against the Polish zloty. On Friday, the zloty traded at 97.432, close to its historic maximum (97.961). Currently, one zloty costs 97.35 forints.

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January 4, 2025

Who’s on the Hungarian banknotes? – The stories behind the historical figures in your wallet

We may not think about it, but we carry a piece of history in our wallets every day. Each of the Hungarian banknotes features a prominent historical figure whose achievements have left an indelible mark on Hungary’s identity. From revered kings to revolutionary leaders, these icons tell stories of courage, innovation, and national pride. In this article, we aim to give a short introduction to the legacy of these outstanding historical icons of Hungary.

HUF 500 – Francis II Rákóczi

Francis II Rákóczi (or II. Ferenc Rákóczi), a revered figure in Hungarian history, appears on the HUF 500 Hungarian banknote. As the leader of the Rákóczi War of Independence (1703–1711), he fought tirelessly against Habsburg domination, striving to secure Hungary’s autonomy. Though the struggle ultimately ended in defeat, Rákóczi’s unwavering commitment to freedom made him a national hero. His legacy endures not only in the annals of Hungarian history but also on the Hungarian banknote.

HUF 1,000 – Matthias Corvinus

Matthias Corvinus, one of Hungary’s most celebrated monarchs, is prominently featured on the HUF 1,000 Hungarian banknote. Renowned for his intellectual prowess and military skill, Matthias reigned during the 15th century, ushering in a golden age of Hungarian culture and governance. His establishment of the Bibliotheca Corviniana, a vast Renaissance library, and his commitment to justice and reform earned him the title “The Just King.”

HUF 2,000 – Gabriel Bethlen

Gabriel Bethlen (or Gábor Bethlen in Hungarian) is featured on the HUF 2,000 banknote. As the Prince of Transylvania in the early 17th century, Bethlen played a crucial role in defending Hungarian independence against foreign powers. His leadership during the Hungarian–Ottoman wars and his efforts to strengthen the Protestant Reformation in Hungary cemented his legacy as a protector of the nation’s sovereignty.

HUF 5,000 – Count István Széchenyi

Count István Széchenyi, celebrated as one of Hungary’s most influential reformers, is honoured on the HUF 5,000 Hungarian banknote. Known as the “Greatest Hungarian,” Széchenyi was instrumental in transforming Hungary during the 19th century, championing vital reforms in infrastructure, education, and industry. His notable achievements include the construction of the Chain Bridge and the establishment of the Hungarian Academy of Sciences, both of which marked significant milestones in the country’s development.

HUF 10,000 – King Saint Stephen

King Saint Stephen, Hungary’s first monarch, is honoured on the HUF 10,000 Hungarian banknote. Crowned in 1000 AD, he is celebrated for founding the Hungarian state and introducing Christianity, which played a pivotal role in shaping the country’s identity. His reign marked the beginning of Hungary’s Christian monarchy, and he is remembered for unifying the nation and establishing its legal and religious foundations.

HUF 20,000 – Ferenc Deák

Ferenc Deák, celebrated as the “Wise Man of the Nation,” graces the HUF 20,000 Hungarian banknote, immortalising his profound impact on Hungary’s 19th-century history. A masterful negotiator and statesman, Deák was instrumental in the peaceful resolution of the Austro-Hungarian Compromise of 1867, which reshaped the political landscape of the region. His vision for legal reform, civil rights, and national unity earned him the admiration of his peers and a lasting place in Hungary’s heart.

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December 24, 2024

400+ forever? Analysts predict a bleak future for the Hungarian forint

Analysts do not expect the euro exchange rate to return to levels below 400 forints in the longer term, and trends suggest that it could reach a level of around 415-420 forints by the end of 2025.

According to Economx, the weak forint has a significant impact on consumer confidence, which is exacerbated by high inflation and expensive food prices. Although inflation is expected to moderate to 3.8% in 2024, households will continue to face declining purchasing power. This trend reflects the steady weakening of the forint in recent years, mainly due to high inflation, low consumer confidence and external economic and political uncertainties. The weak forint is also leading to further increases in the prices of imported goods, putting sustained pressure on household spending.

forint currency economy money — Photo: depositphotos.com

Inflation, which exceeded 20% in 2023, may fall to 3.8% in 2024, but price levels will remain persistently high. The weakening of the forint will further increase the cost of imported goods, including energy and food, which could generate further inflationary pressures. This will slow the recovery of purchasing power and undermine the stability of the forint.

The fall of Premium Hungarian Government Securities

The fall in the yields of Premium Hungarian Government Securities may also have an indirect impact on the forint. Retail investors may shift their money into other assets, such as government bonds issued in foreign currencies or foreign investments. This could reduce demand for the forint, causing further weakening. The central government debt management agency may try to introduce more attractive interest rate conditions, but higher yields on government bonds in the market could still provide strong competition.

The forint’s link to the equity market and the global economic situation

The undervaluation of the Hungarian equity market offers investors new opportunities, but the shift here does not necessarily strengthen the forint. Indeed, the increase in demand for equities is mainly driven by domestic investment, while inflows of foreign capital remain uncertain. The position of OTP, Mol and Richter shares, especially given their exposure to the Russian market, remains vulnerable to international economic influences.

Global economic trends, such as the policies of Donald Trump’s second presidential term, may indirectly influence the forint exchange rate. The US-China tariff war and protectionist US economic policies could put pressure on emerging markets, including Hungary. Problems in the European automotive industry could also affect Hungarian export performance, which could further reduce the stability of the Hungarian forint.

The outlook for the Hungarian forint is weakening in the years ahead, mainly influenced by domestic economic problems, challenges in the international environment and household investment decisions. Persistent exchange rate depreciation and inflationary pressures will further complicate the achievement of economic stability, while global trends and policy decisions will pose new risks. Coordinated action between fiscal and economic policies and the mitigation of external and internal risks would be key to improving the position of the Hungarian forint.

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December 16, 2024

National Bank of Hungary launches HUF 15,000 coin

The National Bank of Hungary has issued a commemorative coin collection to celebrate 150 years of the Hungarian Chamber of Notaries. Released on 12 December 2024, the coins include a silver collector’s version with a face value of HUF 15,000 and a non-ferrous metal edition valued at HUF 3,000. Both coins, designed by sculptor Balázs Pelcz, honour the establishment of modern notarial services in Hungary.

New coin released by the National Bank of Hungary

The National Bank of Hungary has issued commemorative coins celebrating 150 years of the Hungarian Chamber of Notaries, tracing its modern origins to the Act XXXV of 1874. This legislation redefined the notarial office, transitioning from its medieval roots under papal and imperial authority to a public service role under judicial reform. The silver collector coin, valued at HUF 15,000 (EUR 36.63), and its non-ferrous counterpart, worth HUF 3,000 (EUR 7.33), highlight the notarial coat of arms and honour Bálint Ökröss, a pioneering figure in Hungarian notarial history. Ökröss, a key drafter of the 1874 Act and a leader in the profession, also founded the Hungarian Gazette, which continues to be published.

The obverse

The commemorative coin released by the National Bank of Hungary features the notarial coat of arms as the central motif on the obverse. Inspired by an archaic-style seal with a cord, the design symbolises the act of authentication by notaries. The obverse also includes the inscription “150 ÉVES A MAGYAR POLGÁRI KÖZJEGYZŐSÉG” (150 Years of the Hungarian Chamber of Notaries) and essential coin elements such as “MAGYARORSZÁG” (Hungary), denominations of HUF 15,000 and 3,000, and the mint mark “BP.” with the year “2024.”

National Bank of Hungary launches HUF 15,000 coin — Photo: MNB

The reverse

The reverse of the commemorative coins issued by the National Bank of Hungary features a portrait of Bálint Ökröss, based on a historical photograph, as its central motif. The design includes Ökröss’s signature and an inscription in the upper legend recognising him as the drafter of the 1874 Act on Royal Notaries. Sculptor Balázs Pelcz, the coin’s designer, has placed his mark to the left of the portrait, further enhancing the tribute to this pivotal figure in Hungarian notarial history.

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December 12, 2024

Hungarian forint at breaking point: Near-historic low against pound sparks concern

hungarian forint euro pound money economy

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.

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December 2, 2024

New National Bank governor would “further weaken” the forint, says Gyurcsány’s DK

The opposition Democratic Coalition (DK) and Socialist parties have criticised the prime minister’s decision to nominate Mihaly Varga, the incumbent finance minister, to serve as the next central bank governor, saying he would “further weaken” the forint.

DK spokesman Balázs Barkóczi told an online press conference that by nominating Varga to head the National Bank of Hungary, Viktor Orbán had “essentially sentenced the forint to death”.

He said the forint is currently trading at 412 against the euro, but the 2025 draft budget assumes a EUR/HUF exchange rate of 397.5. Barkoczi insisted that the draft budget and Varga’s nomination were the reason “why the forint is falling again”.

Socialist Party lawmaker Zoltán Vajda said the prime minister should have nominated “an independent leader recognised in the field” to head the central bank instead of a “party politician”.

“It had been suspected for months that Mihály Varga will be the next NBH governor, which is another concerning development when it comes to the future of Hungary’s economy,” Vajda said in a statement.

He said the prime minister’s decision suggested “that the government doesn’t intend to make any changes to the policies that have led to the forint’s depreciation and the weakening of the financial security of Hungarian families”.

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Forint hits new low against the euro as exchange rate surges past 413
PM Orbán nominated new Hungarian National Bank governor, forint strengthening, government change comes

November 30, 2024

Forint hits new low against the euro as exchange rate surges past 413

On Wednesday afternoon, the Hungarian forint hit a new low, with the euro exchange rate surpassing 413 EUR/HUF. The currency’s value plummeted to 413.4 before settling slightly at 412.9 by 5 PM. This marks a new milestone, breaking the two-year low set earlier in the week when one euro cost HUF 412.5.

The decline comes amid a drop in European stock markets triggered by a further dip in Germany’s consumer confidence index, Portfolio reports. While the U.S. dollar weakened, economic challenges in Europe heavily impacted the forint, pushing it to this unprecedented level.

The Hungarian currency also showed significant losses against the Polish zloty, reflecting Hungary’s widening economic gap within the region.

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Featured image: depositphotos.com

November 27, 2024

Hungarian forint hits new 2-year low against the euro, attempts to recover

The Hungarian forint plunged to a new two-year low against the euro on Monday morning, briefly reaching an exchange rate of 412.5. Although it attempted to stabilise and regained some ground to 411.7 later in the day, concerns about monetary policy and economic factors continue to weigh heavily on the currency. Meanwhile, external developments, including the nomination of Scott Bessent as U.S. Treasury Secretary by President-elect Donald Trump, added to the volatility.

Key factors behind the forint’s depreciation

The Hungarian forint’s recent struggles are not isolated incidents but part of a broader trend influenced by both domestic and international factors. Over the weekend, global markets reacted strongly to the announcement of Scott Bessent’s nomination, causing a chain reaction that included weaker U.S. Treasury yields, a declining dollar, and gains for emerging market currencies, Portfolio reports. However, the Hungarian currency remained under pressure due to specific domestic economic challenges.

One significant issue is the expectation of future monetary easing by the Hungarian National Bank (MNB). Current forward-rate agreements suggest that markets anticipate a 50-basis-point rate cut within six months and a potential total reduction of 75 basis points within nine months.

One of the unique aspects of the forint’s decline on Monday was its contrast to other regional currencies. While the Polish zloty, Czech koruna, and Romanian leu showed resilience against the euro, the forint’s weakness was exacerbated by speculation about potential changes in the Hungarian National Bank’s leadership. Reports suggest that Finance Minister Mihály Varga may replace György Matolcsy as the central bank governor, fueling expectations of a monetary policy shift. This speculation, combined with anticipated rate cuts in 2024, has raised concerns about the stability of the forint and its appeal to investors.

Economic and geopolitical context

As we reported before, the forint’s depreciation has been exacerbated by the ongoing war in Ukraine, which has strained regional economies. Since January 2022, the forint has lost significant value, with its exchange rate against the dollar rising from 324 to over 400 at its peak. Contributing to this are Hungary’s strained relations with the European Union, including the withholding of EU funds and concerns over Hungary’s close ties to Russia. These factors have fueled fears of economic instability, further driving down investor confidence.

Additionally, weak economic indicators, such as a lower-than-expected German Ifo index, have done little to support the forint. Hungary’s central bank has been criticised for its monetary policies, with earlier decisions to maintain low interest rates reducing the attractiveness of Hungarian assets.

The trade-offs of a weak forint

While a weaker forint could benefit exporters by making Hungarian goods more competitive on global markets, it has significant downsides. Chief among them is the impact on inflation, which remains one of the highest in the European Union. Imported goods and services have become more expensive, placing additional strain on households and businesses.

Recent trends and outlook

Despite Monday’s plunge, the Hungarian currency showed some signs of resilience later in the day, briefly recovering below 411 against the euro. However, analysts caution that the currency remains vulnerable. The MNB’s interest rate strategy and Hungary’s broader economic policies will play a critical role in determining whether the forint can regain stability or faces further challenges in the coming months.

In the broader context, experts like Molnár Dániel from the Makronóm Institute highlight that the government and the MNB currently do not have a specific exchange rate target, Index reports. However, a significantly weaker forint could have inflationary consequences through higher import costs, eroding confidence in forint-denominated assets. Molnár noted that in cases of further weakening, the central bank might intervene with measures, including verbal assurances or more stringent monetary actions, to maintain financial stability and meet inflation targets.

As of now, the Hungarian forint’s future appears uncertain, caught between external pressures and domestic policy debates. The markets will be closely watching developments, particularly around the central bank’s policy direction and Hungary’s geopolitical positioning, for clues on the forint’s trajectory.

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November 25, 2024

Depreciation uncovered: Why has the Hungarian forint weakened so much in recent years?

The Hungarian forint has depreciated significantly in recent years, especially following Russia’s invasion of Ukraine. Compared to other Eastern European currencies, the forint experienced a sharper decline due to factors such as long-term central bank policies and Hungary’s geopolitical challenges. Although recent measures by the Hungarian National Bank (MNB) have helped stabilise the currency, its value remains weaker compared to its past levels, raising questions about the effectiveness of monetary strategies.

Post-invasion decline

According to an experts’ report on Telex, in the wake of the Russian invasion of Ukraine, the forint suffered a dramatic loss in value. At the start of 2022, one US dollar was worth HUF 324, but by 31 December 2022, it had risen to HUF 373. The currency hit its lowest point in October 2022, exceeding HUF 400 per dollar. While the forint has since regained some strength, it continues to underperform when viewed over a broader timeframe.

Comparison with regional currencies

When compared to other regional currencies like the Czech koruna, Polish złoty, and Romanian leu, the forint’s depreciation stands out. While all these currencies weakened during the war, none experienced declines as severe as the Hungarian forint.

Central bank policies and real interest rates

One of the primary factors behind the Hungarian currency’s weakness is the Hungarian National Bank’s monetary policy. For years, the MNB maintained low nominal interest rates, especially when adjusted for inflation (real interest rates). Between 2017 and mid-2023, Hungary’s real interest rates were often below those in the United States, reducing the appeal of Hungarian investments for foreign institutional investors. This dampened demand for the forint, contributing to its decline.

Impacts and risks

A weaker forint has both advantages and disadvantages. On the positive side, it can boost Hungarian exports by making them cheaper on global markets, potentially driving job creation. However, the prolonged depreciation also fuels inflation, which has been among the highest in the European Union.

External factors further exacerbated the forint’s decline in 2022, such as delays in EU funding and concerns over Hungary’s close ties to Russia, which unsettled foreign investors.

Recovery and stabilisation

By late 2022, the MNB shifted to a more aggressive policy, raising interest rates significantly. This resulted in higher real interest rates, which eventually surpassed those in the US by the end of 2023. The stabilisation of the forint supports the view that past monetary policy decisions were a key driver of its earlier depreciation.

Conclusion

While the Hungarian currency has shown signs of recovery, its long-term depreciation reflects a mix of domestic policy decisions and external economic challenges. For the currency to achieve sustained stability, a balanced approach to monetary policy and enhanced investor confidence are crucial.

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November 25, 2024

Spontaneous euroisation continues in Hungary, expert says EUR 1 will cost HUF 500 soon

The Orbán cabinet regularly voices that they would not like to introduce the euro in Hungary until the country’s economy does not meet multiple conditions. However, the significant drops in the Hungarian national currency’s exchange rate resulted in spontaneous euroisation in multiple areas of life in Hungary, including property and car purchases. It seems the trend will continue.

Forint is underperforming

Multiple surveys show that Hungarians stick to their national currency more than other European nations. For example, in Romania, people regularly calculate in foreign currencies when they buy property or high-value goods like apartment renovation or cars. In Hungary, such ads would have been strange a couple of years ago when the forint was stronger. Now, they are no longer odd.

The forint was introduced after Hungary’s pengő experienced the highest inflation in world history following the devastation caused by the Soviet and German armies fighting a deadly battle in Hungary between September 1944 and April 1945. Hungarians liked forint, and the new national currency proved to be a trustworthy means of wealth creation for decades. That changed after the robust inflation and forint weakening that started in H2 2022.

We wrote yesterday that the forint is underperforming compared to other regional currencies. Moreover, it reached historic lows against the American dollar, the Swiss franc, the pound sterling, and even the Polish zloty. Currently, we have to pay more than HUF 411 for one euro. The historical high was almost 424 in November 2022 when the Hungarian National Bank (MNB) intervened and raised the base rate sky-high to protect the forint. Now, they are not expected to do so. Moreover, MNB governor György Matolcsy’s mandate will end next March, so he will probably not carry out fundamental changes in the MNB’s FX policies.

Hungarian forint struggling against a powerful US dollar

Meanwhile, the forint’s weakening is unstoppable. Last June, it was at 362/EUR. Then, a new depreciation trend started, which does not seem to end, primarily due to Trump’s victory in the United States, strengthening the dollar and weakening all emerging currencies, including the forint. Furthermore, Hungarian media regularly reports that the Orbán cabinet is not interested in a powerful national currency because a weak forint helps their export-increasing plans.

Spontaneous euroisation Hungarian forint exchange rate — Will we soon pay in euros instead of forint? Photo: facebook.com/bpcorrectchange

As a result, it is not surprising that spontaneous euroisation started in Hungary in the past few years. Péter Virovácz, a senior analyst of ING, told Cash Tag that sooner or later, we would exceed the HUF 500/EUR 1 currency exchange level. Therefore, the question is when the Hungarians will spontaneously introduce the euro.

Spontaneous euroisation in multiple sectors of the economy

Mr Virovácz said that in the case of multiple commodities, prices are already provided in euros. One example is car purchase. Of course, you can pay in forints for your car, but its sum will depend on the exchange rate, varying frequently.

A similar trend is perceptible in the construction industry. If you ask for a price calculation concerning some kind of development in your home, you may get the price in euros.

In the Hungarian property market, the changes may mean millions of forints. For example, a 90 m2 luxury apartment cost HUF 376 million before. Now, it is HUF 402 million. The reason is that you have to pay in euros for it, and that price remains unchanged: EUR 978 thousand.

The question is how long Hungarians will tolerate this trend. In 2026, general elections will be held in Hungary and PM Orbán has a challenger, Péter Magyar, the head of the Tisza Party and the ex-husband of former Justice Minister Judit Varga. If the Orbán cabinet becomes unable to deal with economic difficulties, Mr Magyar has a chance to win in 2026.

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November 23, 2024

Shocking: Forint in free fall, historic lows against the American dollar, GBP, CHF, PLN!

The considerable strengthening course of the American dollar following the victory of Donald Trump makes it hard for the emerging currencies to keep up. Since the Eurozone PMI hit a 10-month low, the euro started to fall against the dollar, worsening the above-mentioned situation. However, the forint performs badly not only against the dollar. The Hungarian currency reached a historic low against the Swiss franc (CHF), the pound sterling (GBP), and even the Polish zloty (PLN).

According to portfolio.hu, the last time the euro was this weak was in November 2022. In October 2022, the forint reached an all-time historic low against the American dollar and the euro. However, thanks to the intervention of the Hungarian National Bank increasing the base rate sky-high, the Hungarian forint’s free fall could be stopped.

Now, the forint exceeds new historic lows against the USD, GBP, CHF and PLN daily.

Hungarian forint historic lows — Photo: FB/MNB

Historic lows against the American dollar, GBP, CHF, PLN

Currently, the Hungarian currency stands at 395.5 against the American dollar. The last time the forint’s depreciation reached such a shocking level against the American currency was in December 2022. The all-time historic low against the dollar was 435.5 on 8 October 2022.

Prospects are grimmer in the case of the Swiss franc. Following the conversion of CHF loans to forint, Hungarians do not follow the exchange rate changes of the CHF. Data show that the last time the Swiss franc was so strong against the forint was in September 2022 with HUF 437/1 CHF. Now, the exchange rate is at an all-time historic low above HUF 444/1 CHF.

forint historic lows — Photo: facebook.com/jegybank

The forint reached an all-time low against the pound sterling in November as well. Currently, the exchange rate is above 495.5. On 10 December 2022, it stood at 487.1. However, the current all-time historic low is the consequence of a constant and gradual weakening, while the 2022 low was just a swing since on 17 December 2022, the exchange rate was “only” 464.

Concerning the regional currencies, the Polish zloty also performs better against the forint and stands at a historic high with HUF 94.7/PLN 1 at the moment, even though the strengthening of the dollar is bad news for all emerging currencies like the Polish zloty.

Hungarian forint national bank central bank governor Matolcsy historic lows — György Matolcsy, the governor of the Hungarian National Bank. Photo: FB/MNB

Forint eases on interbank forex market

The forint traded at 411.37 to the euro around 10:00 in the morning on Friday, edging down from 411.06 late Thursday. The forint weakened to 394.00 from 391.96 against the dollar. It slipped to 444.13 from 442.35 to the Swiss franc, the MTI wrote.

BUX rises in early trade

The Budapest Stock Exchange’s main BUX index was up 0.29pc at 79,460.46 about 15 minutes after the opening bell on Friday. OTP Bank edged up 0.09pc to HUF 21,620 and oil and gas company MOL rose 0.37pc to HUF 2,686. Pharma share Richter climbed 0.37pc to HUF 10,850 and Magyar Telekom advanced 0.98pc to HUF 1,240. The BUX finished the session on Thursday up 0.17pc. Turnover reached HUF 11.3bn, MTI added.

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November 22, 2024