forint

Good news: pay rises coming in Hungary

Gross wages in Hungary grew by an annual 14.1 percent in September, to HUF 557,900 (EUR 1,466), the Central Statistical Office (KSH) said on Thursday.

The average net wage including benefits rose by 14.1 percent to HUF 384,900 (EUR 1011), KSH said.

The average gross wage without benefits increased by 14.9 percent, to HUF 537,000 (EUR 1414).

Real wages increased by 1.7 percent, calculating with a September CPI of 12.2 percent.

Commenting on the data, Márton Nagy, the economic development minister, said the turnaround in real wages took place in September, the purchasing power of wages is on the rise again for the first time since August 2022. He said the government had brought down inflation into single digits by October, helped by targeted measures such as online price monitoring and mandatory supermarket discounts. Nagy said the government’s goal is for 2023 to be the year of reducing inflation and 2024 that of restoring economic growth. That is why the government supports and helps maintain dynamic wage growth in order for real wages to increase by 4-5 percent next year, he added. He said macroeconomic trends were encouraging since inflation is dynamically decreasing and the economy and real wages are back on a growth path.

November 23, 2023

Central bank governor talks about euro introduction in Hungary

Whether Hungary will introduce the euro in the future has been a burning question ever since the country joined the European Union in 2004. However, up until now, there has not been an official statement on the probabilities of introducing the common European currency to replace the Hungarian forint. György Matolcsy, Governor of the National Bank of Hungary (Magyar Nemzeti Bank, MNB), has just answered a question from a member of parliament on the introduction of the euro.

Right level of euro maturity not reached

Péter Balassa, Member of Parliament asked György Matolcsy what conditions are necessary for the introduction of the euro that Hungary cannot meet. In his reply, Matolcsy wrote that the MNB is “committed to the successful and safe introduction of the euro in Hungary”. However, the country’s economy is “not yet at the right level of euro maturity”, he wrote, according to mfor.hu. He added that at the moment, the Maastricht criteria would not be met either. However, the central bank has developed a set of conditions for joining the euro area, consisting of several variables.

Matolcsy wrote in his response that the Hungarian central bank developed and published in 2020 a set of criteria called Maastricht 2.0. It “takes into account new real criteria in addition to the fine-tuning of the original nominal criteria”. The central bank governor believes that, considering this set of criteria, “Hungary is not yet at the right level of euro maturity”.

Nominal Maastricht criteria not met – Maastricht 2.0

He adds that in the high inflationary environment of recent years, even the nominal Maastricht criteria are not being met. This is because both Hungary’s inflation and long-term interest rate ratios are above the upper bound. The Maastricht 2.0 convergence criteria cited by György Matolcsy were published by the MNB in its publication Fenntartható felzárkózás euróval (Sustainable Catching-up with the Euro). It would also adjust the current convergence criteria.

According to Index, in the longer term, it makes sense to introduce the common EU currency. However, it should also be noted that the scope for economic policy is much narrower after the introduction, especially in response to external shocks, a senior analyst at the Oeconomus Economic Research Foundation told Index.

Finance minitry and the government’s takes on euro introduction

Naturally, several political actors also commented on the issue. Finance Minister Mihály Varga said at the end of August that it was premature to talk about Hungary joining the euro area. At the moment, “the fastest way to achieve a balanced position” is on the agenda. He also stressed that if we had the euro now, the economy would have to take far fewer risks.

Minister of Economic Development Márton Nagy also made his position clear. In May, at his ministerial hearing in Parliament, he said that the euro was not an issue in the short to medium term. He added that the government had no ambition to adopt the euro. “In the longer term, who knows,” he said. Most often, Márton Nagy pointed out that in a recession, the euro is disadvantageous for a country with such endowments as Hungary.

Read also:

November 21, 2023

The National Bank of Hungary releases new commemorative coins

Hungary is honoring the 250th anniversary of the birth of Mihály Csokonai Vitéz with two new commemorative coins.

Two new forint coins

Last month, the National Bank of Hungary introduced commemorative coins for Ferenc Deák. On November 17, 2023, two new coins are released to mark the 250th anniversary of Mihály Csokonai Vitéz’s birth. These commemorative coins pay tribute to one of the most influential poets of Hungarian Enlightenment literature, Pénzcentrum reports.

The scholar poet of the Hungarian Enlightenment

Mihály Csokonai Vitéz, born on November 17, 1773, and revered as the scholar poet (poeta doctus), significantly shaped Hungarian poetry during the Enlightenment era. His literary prowess extended across various genres, from philosophical poems to rococo love poetry, showcasing an innovative approach to content and form. Despite his exceptional talent, Csokonai faced challenges throughout his life, enduring a lack of recognition and financial security. His poems, distributed in manuscript form during his lifetime, gained widespread popularity posthumously. Read about his hometown, Debrecen HERE.

Design and symbolism

The commemorative silver coin, with a face value of HUF 15,000 (approximately EUR 39.82), features a central motif of common chicories, representing a literary attribute associated with Csokonai’s multifaceted poetry. The inscription ’ÉN, ANGYAL MEG ÁLLAT, VAGY CSAK POR MEG PÁRA’ (I, angel and animal, or merely dust and vapour) from ‘Halotti versek’ (Death Poems) by him adorns the edge of the obverse. The reverse showcases a half-length portrait of Csokonai, inspired by an etching by Friedrich John from 1816. Symbolising artistic freedom, both obverse and reverse motifs extend beyond the coin’s edge, with stars adorning the background. Csokonai’s birth and death dates, ‘1773’ and ‘1805’, are elegantly displayed to the right of the portrait.

Who’s the artist behind it?

Borbála Szanyi’s masterful touch is evident in the artistic expression of these commemorative coins. Her signature mark graces the left side of the portrait, emphasising the collaborative effort in bringing Csokonai’s legacy to life. The inscription ‘CSOKONAI VITÉZ MIHÁLY’ encircles the lower left-hand edge of the reverse, set slightly above the base plane and surrounded by a single dot.

A fitting tribute to Csokonai’s literary legacy

The introduction of these commemorative coins not only celebrates the 250th anniversary of Mihály Csokonai Vitéz’s birth but also serves as a lasting tribute to his enduring impact on Hungarian literature. As these coins enter circulation, they become tangible reminders of the profound influence of one of Hungary’s literary luminaries. The silver coin will be available for purchase for three months, while supplies last, and the non-ferrous version for a year from the date of issuance, at face value, in the coin shop and webshop of the Hungarian Mint Ltd. (7 Báthory street, District 5, Budapest), the manufacturer and distributor of the coins, beginning on November 17, 2023.

November 17, 2023

Hungary’s economic forecast: inflation, growth, and exchange rates

The Equilibrium Institute (Egyensúly Intézet) has unveiled its comprehensive economic forecast for Hungary. It outlined expectations for inflation, GDP growth, and the EUR/HUF exchange rates.

Inflationary trends

Despite a 0.6% GDP contraction this year, the Equilibrium Institute anticipates a significant slowdown in inflation, a resurgence in economic growth, and a gradual depreciation of the forint against the euro. According to Economx, the Institute’s analysis suggests that average price increases are projected to be 17.5% in 2023. Nevertheless, there is optimism for a decline in inflation rates in the subsequent years. Forecasts indicate a drop to 5.7% in 2024 and a further decrease to 3.6% in 2025. Rising fuel prices are expected to contribute to inflation, fueled by geopolitical uncertainties and increased excise taxes on oil. However, the Institute predicts a lower rate of increase in food prices compared to overall inflation in 2024.

Monetary policy and exchange rates

The report indicates that the central bank may achieve its inflation target in the second half of 2025. This projected decline in inflation rates could provide room for the central bank to lower the policy rate. The forint-euro exchange rate is anticipated to depreciate gradually, with an average range of HUF 393-403 in 2024 and HUF 406-419 in 2025.

Consumption trends

Following a surge in consumption growth in the previous year, the Equilibrium Institute expects real consumption to contract by over 2% in the current year. Despite this setback, the report suggests a potential rebound in household consumption in 2024, driven by a disinflationary trend and positive real wage growth as the Hungarian economy recovers. Consumption is forecasted to grow by 2.2% in real terms and by 3.5% in 2025.

Financial challenges and budget deficit

The unexpected decline in consumption has presented challenges for the budget, but the government is hesitant to embark on major financial adjustments in the coming year to avoid jeopardising economic growth. The Institute predicts a budget deficit above 3% in 2024, surpassing the government’s committed target of 2.9%.

GDP growth and labor market

Despite the current economic challenges, the forecast indicates a positive trajectory for Hungarian GDP in the coming years. Projections suggest a potential expansion of 3.2% in 2024 and 3.1% in 2025. The prediction expects consumption and increased investment to be key drivers of economic growth. The labor market will remain dynamic, with an unemployment rate of 3.9% this year and a slight decrease to 3.7% in the following year. Anticipated double-digit wage growth and positive real wage dynamics result from tight labor market conditions and a boost in economic activity.

As Hungary navigates the challenges posed by the current economic landscape, the Equilibrium Institute provides a roadmap that highlights the potential for recovery.

November 15, 2023

After months of weakening, Hungarian forint on positive trend – 370 EUR/HUF coming?

As we have seen in the past months, the Hungarian currency has been on a weakening trend. However, the forint seems to have broken out of this negative loop: it is back in good shape. The question is the same as ever: what does the future hold for the currency? There are predictions in both directions.

Forint on a strengthening trend

The forint performed well in the first third of November. The Hungarian currency managed to move well below the 380 level against the euro for the first time since July (read more HERE). The peak was 376.50, now it is a bit above 377.

If any product traded in a concentrated market (stock, commodity, currency) fails to break through a strong technical level, it will usually bounce back from there, Economx writes. This is what happened to the forint this summer-early autumn as well.

It started to move away from the 370 level, and even went as high as 395 against the euro twice. Most market participants saw that as unjustified weakness. Inflation was still around 20% and the uncertainty around EU funds was prolonged, which may have contributed to the weakening.

However, it started to strengthen over a month ago, helped by several factors. The current account has continued to improve, with a persistently large export surplus, which is the most important factor in the exchange rate, Economx explains.

Another crucial effect was the start of a rapid year-on-year decline in inflation, from 20% to below 10% in a few months. The budget deficit was larger than expected due to the fall in consumption and hence the shortfall in VAT revenues, but remained manageable (lower than in the previous year).

Will the currency break the 370 level?

The question then is whether the summer level of 370 could be broken and, if so, what the impact would be. Currently, export surpluses are very strong, as domestic purchasing power has fallen after the high inflation of the previous year and a half. Thus, imports have also fallen. The continued strong surplus is creating a euro oversupply, which is helping the forint to strengthen.

At the same time, the lower exchange rate of the forint appreciates the Hungarian wage level compared to other European countries. With a higher level of catching-up and a smaller wage gap, labour emigration may decrease and the rate of return to Hungary may increase.

If we assume that the economy will soon emerge fully from the inflation crisis, it may in principle be justified for the forint to return to its pre-crisis level, which was between 345 and 370 against the euro, Economx writes.

Negative predictions also present

According to the recent analysis of the Equilibrium Institute (Egyensúly Intézet), an independent Hungarian think tank, the forint is expected to remain on a weakening path in the future, correcting its current overvaluation. The main reasons for this are the gradual disappearance of the attractive interest rate differential and the continued uncertainties surrounding EU funding. According to the institute’s experts, the euro could return above 400 next year, and even approach 420 in 2025.

November 13, 2023

Good news: Forint broke four-month record, fuel prices below psychological barrier

The Hungarian currency broke the 380/EUR barrier and is currently at the 377/EUR level. That is a four-month record, and experts believe that further strengthening remains an option. Furthermore, fuel prices also went below a psychological barrier this week in Hungary.

According to index.hu, the last time the forint was this strong was in July. That comes after Hungary’s inflation went below 10%, which was one of the big promises of the government during the inflation crisis.

The strengthening of the Hungarian national currency started last week when the Fed excluded further interest rate increases. As a result, the EUR and the HUF both strengthened.

Zoltán Varga, an analyst of Equilor, said the forint might continue to strengthen. The next possible level is 375/EUR.

Read also:

Real wages fell brutally: Big Mac index plummeting in Hungary – Read more in THIS article

Meanwhile, consumers got good news from another segment of our economy: fuel. According to holtankoljak.hu, fuel prices continued to decrease in Hungary. Gasoline prices went down by HUF 8, while that figure is HUF 5 in the case of diesel. The average price of 95 gasoline in Hungary stands at HUF 597/l, while that is HUF 626/l in the case of diesel.

Read also:

Brutal hike: MOL CEO shared how much fuel prices will increase in Hungary! – Check out the details HERE

November 12, 2023

Real wages fell brutally: Big Mac index plummeting in Hungary

Hungarian real wages brutally fell, Big Mac index plummeting

Hungary has been struggling with EU-record inflation in the past few months, especially considering food prices, resulting in a significant decrease in real wages. Food inflation has been extremely high, 50-100% between 2022 and 2023. That is what the so-called Big Mac index also highlights. It was years ago that a Hungarian average salary was worth this low number of BM menus.

According to portfolio.hu, a Hungarian economy-focused new outlet, between 2005 and 2022, the price increase of a Big Mac menu was much below the average food price inflation in Hungary. It was even a bit below the general inflation, too. The difference between the menu’s price and the inflation rate broadened in 2022, but the former reached the latter in 2023. Probably because of a conscious business policy decision.

Between 2009 and 2022, the number of Big Mac menus an average Hungarian could buy increased significantly and continuously. In 2009, you could buy 110 medium menus from an average Hungarian net salary. That number rose to 205 by 2022.

However, the opposite of 2022 was the year 2023, when every negative trend reached in Hungary. Therefore, György Surányi, a former president of the Hungarian National Bank, believes the two years should be considered as one unit.

In the case of the Big Mac medium menu, prices did not follow the inflation until October 2022. That means it was worth buying the menu in summer 2022 because average wages rose, but the menu’s price remained almost unchanged. However, McDonald’s began to increase the menu’s price drastically. In 2022, the average food price inflation was 23.3%, while the menu price increased only by 6.15% in Hungary. The reverse trend ruled 2023. You had to pay 20.3% more for a Big Mac menu, while the average food price rise was only 2.3%.

Wages back at the 2018 level in Hungary

As a result, the number of menus you could buy from an average Hungarian net salary brutally fell. In February 2022, it was at a peak of 235. That came after the government transferred much money to the people before the general elections. The money transfers included the 13th-month pension and the tax refunds to families raising children.

After February, the trend reversed and by August 2023, an average Hungarian wage was worth only 167 McDonald’s Big Mac menus. That is a bit above the 2018 number, which might mean the purchasing power of the Hungarian salaries fell back 4-5 years. We wrote about that in detail HERE.

According to The Economist’s Big Mac index, the Hungarian forint was 28.5% underrated to the US dollar. We wrote HERE that the Hungarian currency broke a psychological barrier on Friday.

In THIS article, you may read about foodora’s big announcement considering their delivery prices in Hungary.

November 5, 2023

Hungary’s forint broke psychological barrier

Hungary’s national currency, the forint is on a two-month peak by breaking a crucial psychological barrier yesterday.

According to Világgazdaság, an economy-focused Hungarian online news outlet, the positive October US employment data helped the Hungarian forint break a new psychological barrier. That is because the American Fed is not expected to continue to raise interest rates.

The last time the euro-forint exchange rate was below 380 was in end-August. Currently, it stands at 379.98. On Friday morning, that rate was around 382.

A senior analyst of Equilor Investment Ltd, Zoltán Varga, said provided the forint strengthening remains, the next barrier would be at 377.2. In the case of the USD, the next barrier will be at 351.86. Currently, 1 USD costs 353.77 forints.

We wrote HERE that even a HUF 700/l fuel price is imaginable from next January because the government increases the excise tax on those products following an EU direction. Meanwhile, we wrote HERE about a possible minimum wage rise in Hungary in 2023.

November 4, 2023

Central bank’s surprising interest rate decision: forint falls

As we wrote earlier today, Tuesday’s interest rate decision by the Hungarian central bank could move the forint. The Monetary Council of the central bank cut the base rate by 75 basis points to 12.25 percent. At the same time, the two ends of the interest rate corridor were also lowered by the same amount, according to a decision published on the central bank’s website.

The Monetary Council of the National Bank of Hungary (MNB) held another interest rate decision meeting on Tuesday. It decided to cut the base rate by 75 basis points, Portfolio reports. This marks a change in the pace of interest rate cuts after five consecutive 100 basis point rate cuts.

As previously expected, all options were possible, from keeping the interest rate on hold to a 100 basis point cut. The decision is a slight surprise compared to the expectations of most experts.

Forint falls after MNB cuts interest rates

The Hungarian currency reacted poorly to the interest rate decision. Analysts had expected the central bank to slow to 50 basis points per month from the previous 100 basis points, but it cut rates by a larger amount, to 75 basis points. Unsurprisingly, the forint weakened slightly on the back of the stronger-than-expected easing, Portfolio notes.

In recent minutes (around 2 PM), the EUR/HUF exchange rate has reached the 383 level.

October 24, 2023

Forint in focus today: Interest rate decision on the table

Yesterday, the forint market was very subdued due to the national holiday of 23 October. Today is the day of the central bank’s interest rate decision. The response to the decision could move the forint – and we shall see in which direction.

The forint was a minor player in Monday’s trading due to the national holiday. The euro was trading below HUF 382 shortly before 9 AM. At that time the dollar was trading around HUF 361.

Compared to Friday evening levels, these exchange rates represent a minimal increase in the forint, mfor.hu notes. At that time, the euro was HUF 382.34 and the dollar HUF 361.59.

For the Hungarian currency this week, the comments regarding the central bank’s interest rate decision on Tuesday could be important as it could trigger a weakening or a strengthening trend.

Find our reports on the National Day celebrations and commemorations below:

October 24, 2023

Government positive about receiving EU euro billions but forint still weakens

Hungary is “confident” that a deal can be reached with the European Commission which suits both parties and results in the country receiving its EU funding, Tibor Navracsics, the minister of regional development, said on Thursday in Brussels.

“We still intend to conclude talks in the shortest possible timeframe, which is why we’ve intensified consultations and discussions,” the minister told MTI after meeting Didier Reynders, the justice commissioner, and Johannes Hahn, the budget commissioner, on the implementation of “super milestone” measures connected with the release of EU funds.

The talks included areas in addition to justice, he noted. “[I’d] like to be able to reach an agreement by the end of November.”

He said talks were proceeding smoothly when it came to Erasmus and the issue of universities operating under foundations, and the positions of the sides, he added, were “very close”. Hungarian youth organisation may solve the Erasmus crisis Orbán cannot – Read more HERE.

Orbán will reach a behind-closed-doors deal with Brussels concerning the EU money?

Referring to a recent Financial Times report suggesting that the EC may shortly come to a deal with the government on condition that Hungary backs higher EU budget support for Ukraine, he said: “We don’t know anything about this, but we really do want to conclude negotiations as quickly as possible…” We wrote about a possible deal and how Věra Jourová, the European Commission’s Vice-President for Values and Transparency, reacted on that HERE.

Asked about Polish prime minister candidate Donald Tusk’s comment during the election campaign that if he got the top job then Poland’s EU funds would be unblocked, Navracsics said if all funding depended on was who the prime minister happened to be and a country’s kind of government, “then the commission would be essentially distinguishing between some member states on a political basis and this, I think, would be at odds with the [EC’s] remit.”

According to portfolio.hu, the Hungarian forint continued weakening today despite strengthening in the last few days. However, before it broke the 380/EUR psychological barrier, the national currency’s exchange rate halted. It stands around 384/EUR, probably because of the strengthening US dollar.

October 20, 2023

Ferenc Deák commemorative coins released in Hungary

In celebration of the 220th anniversary of Ferenc Deák’s birth, The National Bank of Hungary (MNB) has unveiled special commemorative coins that pay tribute to one of Hungary’s most influential historical figures. These coins serve as a reminder of Deák’s crucial role in shaping Hungary’s modern history and legislative progress.

Deák’s enduring legacy in Hungarian history

According to Pénzcentrum, the commemorative coins highlight Deák’s legislative work as a lawyer and minister. They also recognize the formation of the first responsible Hungarian government during the 1848-49 Revolution. Ferenc Deák, born 220 years ago, was a key figure in 19th-century Hungarian history. He played a pivotal role in shaping the modern Hungarian state. Additionally, he led negotiations that led to the reconciliation of 1867, ushering in Hungary’s growth.

Artistic representation and symbolism

Designed by the talented artist Balázs Bitó, these coins feature a wax imprint of the 1848 Minister of Justice’s seal on their obverse, symbolising an essential component of Hungary’s legal framework and legislation during this transformative period. On the reverse side of the coins, there is a half-length depiction of Deák, which is reminiscent of a lithograph by the renowned Austrian painter Franz Eybl from 1842. Alongside the image is Deák’s signature and the years 1803 and 1876, marking his birth and death. They also bear one of Deák’s most famous exhortations: ‘Kockáztathatunk mindent a hazáért, de a hazát kockáztatni semmiért nem szabad‘ (We can risk everything for the homeland, but we may not risk the homeland for nothing).

Technical details of the commemorative coins

Both the silver and non-ferrous metal coins have a diameter of 38.61 millimetres with a notched edge. The silver coin, valued at HUF 15,000 (EUR 39.04), is crafted from 925 silver and weighs 31.46 grams. Meanwhile, the non-ferrous version, with a face value of HUF 3,000 (EUR 7.81), is composed of an alloy of 75% copper and 25% nickel, weighing 30.80 grams.

How to acquire them?

For those eager to acquire these commemorative coins, they are available for purchase at face value at the coin shop and webshop of Hungarian Mint Ltd., the manufacturer and distributor of the coins. This opportunity will be open for three months after the initial issue date (17 October 2023), with availability subject to stock.

By issuing commemorative coins, a nation pays tribute to the legacy of individuals who have significantly impacted its history, like Ferenc Deák or the Hungarian Nobel laureates, Katalin Karikó and Ferenc Krausz. It is a way of showing respect and appreciation for their contributions.

October 19, 2023

Hungarian forint struggles against EUR 400 exchange rate

For the time being, it seems to have moved a little further away from the EUR/HUF 400 level, but the forint is in a rather unstable condition.

One-month high

The forint reached a one-month high on Wednesday 18 October. In August and September, EUR was already worth HUF 395 and was close to the 400 mark. However, the limit was not met and the forint strengthened slightly.

Exports are strong and import costs have fallen thanks to the normalisation of gas prices and falling consumption.

Positive signs?

Also helping the forint is the fact that hopes are now alive again for the disbursement of EU funds. This means there is a good chance that the forint could remain stable, and if EU funds arrive, the 370 level could become a reality again, economx.hu writes.

October 19, 2023

Depressing: Hungarian forint loser of the past decade

The Hungarian forint is in a negative trend, and it has been for some time. Now, the currency seems to have been stagnant for the past few days. This gives experts a good time to examine how it has been behaving in the past compared to other independent EU currencies.

The forint exchange rate has been less volatile in recent days than in the past. Economx.hu found this a good time to look at how the domestic currency has performed over different time horizons against the remaining independent EU currencies.

The forint started its weakening trend six years ago. In principle, Hungary’s economy has already reached the level of development where a sustained weakening of the currency is unjustified. In the short term, the currency may be subject to shocks (like the gas price explosion last year) but the earlier weakening has magnified this effect, the economic news portal writes.

The forint is the weakest among the regional currencies

Of the 27 current members of the European Union, 20 are already in the euro area. Apart from Hungary, Sweden, Denmark, Bulgaria, Romania, Poland and the Czech Republic still use their own currencies. Economx looked at the performance of the currencies over 10 years.

The forint was trading between 285-290 against the euro at this time 10 years ago. Now, the exchange rate is 388. This represents a depreciation of 35% over the period (it is important to note that the exchange rate remained stable within a range from the beginning of 2014 until spring 2018). However, the depreciation was already strong in 2019, even though there was no crisis at that time.

eur/huf 2013-2023 — Development of the Hungarian currency (EUR/HUF exchange rate) 2013-2023. Source: tozsdeasz.hu

Currencies of the region

10 years ago, the Polish zloty was 4.20 to the euro, now it is 4.53. This represents a depreciation of 8%. The Czech koruna has strengthened: while 10 years ago, it was 25.7 to the euro, it is now 24.7: a 4% appreciation. The Romanian leu was 4.35 against the euro 10 years ago and is now 4.96. That represents a total depreciation of 14%. This happened almost entirely between 2017 and 2021, as before and after the exchange rate was stable.

Thus, if we compare the currencies, the forint is by far the worst performer, with a 35% weakening. The biggest drawback of the strong forint depreciation is that it has also devalued domestic wages. Presumably, without the strong depreciation, inflation would have remained much lower over the past two years, Economx concludes.

Read also:

October 16, 2023

New forint coins are poised to be introduced, featuring Nobel-prize laureates Karikó and Krausz

The Hungarian National Bank will issue two new silver and non-ferrous metal coins this year.

According to Infóstart, the national bank intends to commemorate the 220th birthday of Ferenc Deák, known as ‘The Wise Man of the Nation’, and the 300th anniversary of the foundation of the Kúria with this move. These two coins will be crafted from non-ferrous metals. Additionally, the national bank plans to issue two more silver coins to honour the Hungarian Nobel laureates, Katalin Karikó and Ferenc Krausz.

Karikó, a Hungarian biochemist, was awarded the Nobel Prize in medicine, alongside Drew Weissman, for their discoveries concerning nucleoside base modifications that enabled the development of effective mRNA vaccines against COVID-19. Meanwhile, Krausz received the 2023 Nobel Prize in Physics ‘for experimental methods that generate attosecond pulses of light for the study of electron dynamics in matter,’ alongside Pierre Agostini and Anne L’Huillier. The last time a Hungarian or Hungarian-born individual received the Nobel Prize was in 2002 when Imre Kertész was awarded the Nobel Prize in Literature for his work, ‘Fatelessness’ (Sorstalanság).

With over 20 years having passed since a Hungarian last received the Nobel Prize, the nation was delighted to learn that two Hungarian scientists have received this honour. Katalin Karikó now occupies the former workplace of Nobel laureate Albert Szent-Györgyi (1937 – medicine) at the Molecular and Analytical Chemistry lab at Szeged University.

Katalin Karikó at Szeged University, in the former room of Nobel laureate Albert Szent-Györgyi. Photo: MTI

National bank celebrates Hungarian Nobel laureates with new forint coins

Eszter Hergár, the National Bank’s Director of Social Relations, talked about the upcoming silver forint coins that will commemorate the remarkable achievements of the two Hungarian scientists.

Mrs Hergár mentioned that they intend to produce 5,000 coins to honour Ferenc Deák and the Kúria. Meanwhile, 20,000 coins will be dedicated to celebrating Karikó and Krausz. They anticipate that the new coins will sell rapidly, as was the case with the earlier collection featuring Hungarian dog breeds.

Mrs Hergár revealed that negotiations are already underway regarding the new Nobel laureate coins, which will be oval in shape. This series began with Albert Szent-Györgyi in 2012, and in 2022, coins were issued in honour of Imre Kertész, while György Oláh’s coin is currently in the design phase.

Interestingly, this will not be the first coin featuring Karikó. In 2022, the MNB issued a silver coin (HUF 15,000) and a commemorative coin (HUF 3,000) to celebrate Karikó for her mRNA-based vaccines. These coins had a rectangular shape.

The director added that experience has shown an increasing interest from people in acquiring such coins, including gold ones. Some purchase them as investments, while others add them to their collections.

The last time we reported on the introduction of new forint coins in Hungary was in September, you can read about it HERE. Click HERE to learn more about the new ‘National Archives’ coin.”

October 15, 2023

What does the future hold for the forint? 300/EUR or 400/EUR zone?

Although this can be said almost every week, the week behind us has also seen a lot of turbulence in the forint exchange rate market. The Hungarian currency has seen both a sudden rise and a sudden fall. In the end, it managed to close the week below 387/EUR, but it will be interesting to follow the forint exchange rate in the upcoming weeks.

EU funds are coming

As we have reported HERE, Hungary could receive a significant part of the EU funds it is entitled to by the end of November. The country might not receive the EUR 13 billion that have been frozen, but EUR 10.7 billion. Tőzsdefórum writes that later, the President of the European Commission called the news speculation and several relatively contradictory reports were published. Whatever the truth is at this stage of the negotiations for the money, it is clear that, in line with what analysts have said in the past, the issue of EU funds remains very relevant for the domestic currency. It was also important information that the government is raising the budget deficit target for this year to 5.2%.

A ray of hope

According to some experts, the news of receiving the EU funds could have had a positive effect on the forint exchange rate. However, it did not really happen. As we have reported HERE, the forint started weakening even after the great news. The situation got so out of hand that the Hungarian currency reached the 390/EUR zone again. This is extremely unfortunate considering the fact that the forint showed a huge strengthening in the first half of the fiscal year.

Tőzsdefórum also writes that it is not only country-specific factors that can be important: developments in international market sentiment can also have an impact on the forint exchange rate. Especially if they are shaped by the monetary policies of the major central banks. This is certainly the case now, and the investor climate in Europe and overseas has become quite volatile accordingly.

What is next?

We should also take into consideration what is perhaps the most important issue for the forint, the monetary policy of the Hungarian National Bank. Analysts at ING expect the central bank to cut interest rates by only 25 basis points in October, as a sign of caution. The interest rate paid on the forint could therefore remain well above regional levels. The high interest rate level could support the forint, so ING expects a 375/EUR exchange rate by the end of this year. By mid-2024, the forint exchange rate could sink to 365/EUR, and by the end of the year, ING experts expect 370/EUR. You can read more about the forint’s roller coaster HERE.

October 10, 2023

Good news from Hungary’s roads: drastic fuel price fall, number of accidents decrease

Fuel prices are going to decrease drastically in Hungary from this Wednesday. Thankfully, the fall will affect both diesel and gasoline. Meanwhile, police said that the number of road accident fatalities fell.

Fuel prices decrease drastically now, but will they increase again?

According to portfolio.hu, a Hungarian economic news outlet, gasoline type 95 will cost HUF 610 (EUR 1.57) per litre, while diesel will cost HUF 660 (EUR 1.7) per litre. The decrease in the purchase prices reaches HUF 20, which will appear in the prices at fuel stations.

However, experts are not too optimistic concerning future changes. The start of the heating season and the expected Russian and Saudi production decrease of the crude type essential for diesel foretell higher prices.

Mfor.hu wrote that the Hungarian government could protect the consumers from the swings of the global oil and fuel market with a stronger forint and lower taxes. However, the forint has been weakening since this summer, and a tax reduction is unimaginable because of the high budget deficit. What is more, the tax will increase from next January, which will result in a fuel price rise.

Read also:

September brings extremely expensive diesel prices to Hungary – Read more HERE
Significantly higher fuel prices expected from next January – Click HERE for more

Concerning diesel prices, Hungary is on the European average, but if we compare the prices with the neighbouring countries, fuel is cheaper everywhere but in Austria. The same trend applies to gasoline. In the latter category, only Croatia, Austria and Slovakia precede Hungary.

Mfor.hu believes fuel prices will stabilise at the HUF 600 (gasoline) and HUF 650 (diesel) levels. Therefore, the government will not introduce the fuel price caps again.

Police: Road accident fatalities fall

The number of road accident fatalities in Hungary fell by close to 20% in January-September from the same period a year earlier, the national police headquarters (ORFK) said on Saturday on police.hu. A total of 10,674 accidents involving injury took place on Hungarian roads during the period, including 299 in which there were 324 fatalities. The main causes for the accidents were speeding (27%), failing to yield the right of way (26%) and illegal manoeuvres (15%).

October 9, 2023

Forint in shambles: 400 HUF/EUR may be on the cards

Forint in shambles: 400 EUR/HUF may be on the cards

Despite a promising performance in the first half of the fiscal year, the forint fell steeply over the summer. Could the end of this year bring a 400 HUF/EUR exchange rate?

Forint coaster: rolling downhill?

The forint was the fourth worst performing currency globally in the third fiscal quarter of 2023, Portfolio reports. After a temporary 2.5% strengthening against the euro in the first half of the year, the Hungarian currency has weakened by 4.4% in the past three months, underperforming both globally and regionally. Besides domestic policy, the strengthening dollar is also to blame: the forint fell by 7.7% against the greenback in Q3, outperforming only the Argentinian and Chilean pesos and the Russian ruble.

Aggravating factors

The following six key factors well explain the sudden depreciation of the Hungary currency. What makes matters worse, they will likely continue to wreak havoc.

The reduction of interest rates by the Central Bank of Hungary from an outstandingly high 18% to 13%, with further projected cuts in the future
Persistently sky-high inflation rates due to the already 700 billion HUF (EUR 1,800,356,600) overstretch of the 2023 budget.
Market fluctuations and negative investor sentiments as a result of possible austerity measures
The underperformance of the Hungarian economy, with the ongoing recession only expected to improve in Q4. Even with a positive fourth quarter, the previously planned 1.5% growth in GDP in 2023 seems unattainable at present
EU cohesion and recovery funds are likely to remain frozen without any agreement between the Hungarian government and the European Commission on issues of corruption and the rule of law
The steady strengthening of the dollar against the euro.

Gloomy outlook

Due to a strong Q1 and Q2 performance, year-long statistics show that overall the Hungarian currency is still up by 1.3%. However, the last three months of the fiscal year could see a return of the 400 HUF/EUR nightmare, Portfolio warns. Firstly, a sustained strengthening of the dollar against the euro will take a toll on the forint. Secondly, late October might bring further reduction of interest rates inflicted by the Central Bank as inflation dwindles. The end of the year will also likely necessitate answers on the volatility of the national budget and the fate of stuck EU funds.

A significant increase in the deficit target of the budget, as well as an ongoing standstill in negotiations with the European Commission, would send a negative message to markets, shaking the fragile sense of security of the Hungarian economy at its core. Cooperation with the European Commission and gradual and moderate adjustments to the budget, Portfolio concludes, would be crucial to dispel market concerns about the economy in order to remain near the 390 HUF/EUR exchange rate for the remainder of 2023.

Author: Dóra Busi

October 4, 2023