forint

PHOTO: New forint coin with truly unique motif coming today!

New forint coin will appear in Hungary

The Hungarian National Bank will issue a commemorative non-ferrous metal coin with a face value of HUF 3000 (EUR 7.7), called “Transylvanian Hound”, on World Animal Day, 4 October 2023. The commemorative coin depicting the characteristics of the Transylvanian hound will be the fifth in a series of coins with Hungarian shepherd and hunting dog breeds. The coin was designed by the artist András Szilos.

The Transylvanian hound

Pénzcentrum reported that the National Assembly declared all domestic dog breeds, including the Transylvanian hound, a national treasure. In 2017, this hunting dog was added to the Hungarikum Collection along with eight other indigenous dog breeds. The Transylvanian hound may have arrived in the Carpathian Basin with the Hungarians‘ conquering ancestors. The hardy, intelligent and extremely well-oriented breed has been shaped by environmental factors and hunting needs.

The breed’s history

The breed’s heyday dates back to the Middle Ages, when they were a popular aid to royal and aristocratic hunts, alongside greyhounds. The Transylvanian hound was used mainly for hunting. Social, economic and political changes after the Second World War led to the breed becoming neglected and the number of purebreds steadily declining. From 1968 onwards, more and more people began to breed the Transylvanian hound. Nowadays, the breed has stabilised but is still endangered.

The coin

The commemorative coin of the Transylvanian hound follows the motif choice that characterises the series. The dog is depicted on the front as a single figure. Meanwhile, on the back, it is placed in a scene typical of the breed. The picture on the front reflects the breed’s character, its clever and courageous disposition. The back also bears the obligatory elements of commemorative coins: the inscription “HUNGARY” at the top of the half-circle, indicating the issuer, the inscription “3000 FORINT” in the lines to the right of the dog, the year of issue “2023”, the “BP” mintmark that refers to the place of issue.

The back of the coin shows a hunting scene of two Transylvanian hounds chasing a wild boar in a thickly vegetated field. The inscription “ERDÉLYI KOPÓ” (“TRANSYLVANIAN HOUND”) appears in the upper half-circle of the back. In addition, the design bears the artist’s, András Szilos’, mark on the lower right-hand side of the back.

forint new coin Transylvanian hound
Source: www.mnb.hu

Read also:

Continuous weakening: Forint cannot be saved by EU funds news

Hungarian forint

On Wednesday morning, the forint started weakening against the euro again. The exchange rate is once again hovering above 390. Despite encouraging news on EU funds and attempts to strengthen on Tuesday, there was no significant momentum.

The forint was trading around 391.15 against the euro on Wednesday morning. This meant a 0.3 percent weakening for the Hungarian currency. Yesterday, the forint tried to strengthen, with the exchange rate sinking to around 386: however, by the evening, the it was weakening again, Portfolio reports. (Read about the good news on EU funds HERE.)

The market is still primarily concerned about the rise in US bond yields, with the overseas 10-year already at 4.87%. Seeing the trend, the only question is when it will reach the critical 5% level.

The forint is now trading at around 373.5 against the dollar, while the pound is at 450.3.

Among the region’s competitors, the Polish zloty and the Czech koruna also started the day with minimal losses of 0.1 percent. In emerging markets, the Turkish lira weakened by half a percent against the dollar and the Russian rouble by 0.3 percent.

The strengthening of the US currency has not been good for the forint and other emerging market assets, Portfolio writes. Yesterday, the dollar climbed back below 1.05 against the euro and is now trading near 1.045, which represents a further 0.1% strengthening of the US currency.

Read also:

Vulnerability: forint faces tough months ahead

Hungary budget forint game

During its September meeting, the National Bank of Hungary (MNB) lowered its one-day deposit rate by 100 basis points to 13%. This measure may defend the forint exchange rate from the current fall. The Russia-Ukraine war and energy prices are still a risk, but the currency market is worried about the movement of the US and the dollar.

Meanwhile, the base rate was left unchanged, closing the gap between the two rates one year after the creation of the new facility, and concluding the normalisation of the extraordinary interest rate environment. Hence, from now on, the base rate will return to be the effective bank interest rate, 24.hu reports.

The base rate of 13% is still capable of strengthening the forint in “peacetime”, or at least preventing a substantial weakening. This is conditional on the absence of any turbulence in international markets, the outbreak of a new war or any geopolitical tensions or turmoil, said Miklós Kolba, senior treasury trader at ING Bank. We also wrote about the forint’s current decline HERE.

The current Hungarian base rate is outstanding on global scale as well

“It cannot be compared with the 30% interest rate in Türkiye, but currently Colombia is the only one with a higher benchmark interest rate than ours: 13.25%. In other Latin American countries, and particularly in Asia, interest rates are typically lower everywhere. But Hungary has a big advantage over these “competitors” in that it is part of the European community, which is generally subject to lower benchmark interest rate caps,” says Viktor E. Szabó, Investment Director at Aberdeen Asset Management in London.

However, we are still the riskiest in the region, with the worst credit rating and the highest debt-to-GDP ratio in east-central Europe. To make matters worse, the receipt of EU development funds continues to lag behind, with the country failing to deliver GDP growth since the fourth quarter, while a huge fiscal adjustment is needed. At the same time, inflation has not been reduced as much as communicated.

There are risks that could be bigger than latest clash between National Bank and Government

By the beginning of the summer, the EUR/HUF exchange rate had strengthened to around 370, but since then, it has been hovering between 380 and 390 (and even crossed well above 390 on 28 September). The main reason for this was that the dollar strengthened significantly against the euro in parallel with the US Fed’s interest rate hikes, and rising dollar interest rates tend to have a negative impact on emerging markets.

The debate over EU funding also continues, with some predictions that there could well be no agreement on development funds before the EP elections next June, Miklós Kolba warned.

This means that the Hungarian government has neither external nor internal resources to reduce the budget deficit in any meaningful way, and is unlikely to have them in the near future. There is a high risk that the country’s most important external market, Germany and the eurozone, will go into recession. This will leave little room for manoeuvre for Hungary to grow even with fiscal austerity, 24.hu explains.

In such a situation, it is unfortunate that the MNB and economic policymakers are at odds with or contradicting each other, after last week’s spat between central bank governor György Matolcsy and finance minister Mihály Varga. Moreover, the speeches of economic development minister Márton Nagy and prime minister Viktor Orbán have also worked against predictability.

The Russia-Ukraine war and the gas price hike remain a risk for the forint, but it is worth keeping a watchful eye on America. The dollar has been strengthening since July – weakening the forint.

Attention! New forint coin introduced today – PHOTO

New forint coin will appear in Hungary

Hungary’s national bank issued a new commemorative coin today. Its value is HUF 3,000. The bank aims to help us remember the victory of the Hungarian defence forces over the invading Croatian army in 1848.

On 15 March, there was a successful civic revolution on the streets of Pest. Following that, the Habsburg emperor and Hungarian king, Ferdinand V (1835-1848), nominated a government responsible to the Hungarian National Assembly. In July, an election was held, after which the parliament assembled and started the legislative work, aiming to transform Hungary from a feudal state to a modern one. However, Vienna wanted to crush the revolution’s successes and sent their pawn, the Ban of Croatie, Josip Jelačić, to conquer Pest.

However, on his way to the Hungarian capital, he suffered a defeat from the Hungarian Defence Forces led by János Móga near Pákozd, at Lake Velence. We wrote about the incredible victory of the greenhorn Hungarian army against the experienced Croatians HERE.

According to origo.hu, that is the victory that the Hungarian National Bank would like to commemorate on their latest coin issued today. Today marks the 175th anniversary of the Hungarian victory. The face value of the coin designed by Mercédesz Dorisz Molnár, a Hungarian sculptor, is HUF 3,000 (EUR 7.69). Historians regard the Battle of Pákozd as the start of Hungary’s freedom fight against the Habsburgs.

Read also:

Here is a photo of the new coin:

New forint coin made of coated non-ferrous metal

In 1992, Hungary celebrated the Day of Land Forces on 29 September. In Pákozd, a military memorial park presents the history of the Hungarian Defence Forces formed in 1848.

The coin was made of non-ferrous metal (90% copper, 10% zink), coated by patina. The bank will make 10,000 copies of it. It is the newest and 10th member of a series presenting national memorials. On the front, you can see the commemorative obelisk erected in 1951, while on the back, you may see the national memorial with its surroundings and Lake Velence.

You may buy the new coin in the shop (7 Báthory Street, 5th District, Budapest), or the online store of the Magyar Pénzverő Plc. until 29 September 2024. HERE you may find the link.

Forint weakens uncontrollably, reaches 6-month low: 400 EUR/HUF on horizon

In recent days, we have seen a sharp weakening in the forint exchange rate. The 400 psychological level against the euro is slowly being reached again.

According to Portfolio, it is worth paying particular attention to the dollar now. The US currency is hovering around the 1.05 level against the euro. If it can break through it on a sustained basis, it could bring further weakening of the forint.

6-month low for the forint

Shortly before noon today (28 September), the euro was worth 394.53 forints. The last time the forint was weaker than this was at the end of March, hvg.hu reports. The exchange rate is now around 393.6, which is still 0.25% weaker than yesterday.

The forint is also helped today by the dollar correcting after reaching the psychological level of 1.05. It has not been able to sustain this level for the time being. The euro-dollar now stands at around 1.0533, 0.3% higher than Wednesday evening, Portfolio writes.

What triggered this?

As hvg.hu explains, there have been several events in recent days that may have worried investors. At the Economist’s rally (Közgazdász vándorgyűlés), first Finance Minister Mihály Varga spoke about the possibility of austerity measures, and then Minister for Economic Development Márton Nagy said that the government is in crisis management mode.

The coordination between the central bank and the government has now completely broken down. The national bank first in its interest rate decision on Tuesday and then in its Inflation Report on Thursday estimated that inflation could be higher than expected and that Hungary could be in a year-long recession.

Read also:

Forint broke a new psychological barrier today

forint historic lows

The Hungarian forint has broken a psychological barrier this morning exceeding 390/EUR. And it seems the weakening of the Hungarian national currency will continue.

According to Portfólió, forint reached 390.3/EUR this morning. The last time the currency was this fragile was in last March. The national bank director’s and the finance minister’s grim statements had a negative effect on the forint. The question is whether PM Viktor Orbán will be able to reverse that trend with his opening speech of the parliament’s autumn session. Considering the US dollar, forint stands at 367, while in the case of the GBP, we are at 449.2.

Meanwhile, the Polish zloty started the week with strengthening, while the Czech koruna is still stagnating.

Gross wages are up, but inflation devours the increase

Gross wages in Hungary rose by an annual 15.2% in July, to 559,100 forints (EUR 1,434), the Central Statistical Office (KSH) said on Monday. According to index.hu, real wages are 2% down compared to last July’s figures, the Hungarian Central Statistical Office stated. That is because the average annual inflation reached 17.6 %. Real wages have been plummeting for 11 month straight.

The average net wage, including benefits, rose by the same pace to 371,800 forints, KSH issued. Real wages fell by 2.0%, calculated with a July CPI of 17.6%. The gross median wage increased by 16.3% to 450,000 forints (EUR 1,153.59) . Hungary’s statutory monthly minimum wage was raised by 16% to 232,000 forints (EUR 594.74) for unskilled labourers and by 14% to 296,400 forints (EUR 759.83) for skilled workers on January 1.

Forint on a slope again, and the worst may come next week

Hungarian forint economy

Forint broke crucial barriers this week, reaching the 390/EUR level again. That means the Hungarian national currency may weaken to 395/EUR next week, so the 400/EUR psychological barrier will be closer than ever before in the past half year. Forint was above 400/EUR last December.

As we wrote earlier, statements about possible tax increases in the banking sector mentioned by Hungary’s finance minister at a Thursday conference harmed the forint considerably. Furthermore, Hungary’s national bank governor, György Matolcsy, slammed several government measures, including the price cap schemes and the skyrocketing expenditures before the 2022 general elections. As a result, the forint hit 388/EUR by Friday but has not stopped there.

The Hungarian national currency continued its journey on that slope over the weekend. Currently, it stands above 390/EUR, and experts believe we should not expect anything good in that regard next week.

The weakening of the forint started with the interest rate decision of the American Fed. The American bankers did not change the rates, which hit the forint hard. According to Világgazdaság, a Hungarian economy-focused news outlet, the forint may weaken to 395/EUR next week.

Read also:

  • Market leader Porsche subsidiary introduces the euro in Hungary – Read more HERE
  • People have spoken: 2/3 of Hungarians would introduce the euro

US dollar and Hungarian officials hit the forint

The news outlet said the forint had several resistance levels in the 380-395 zone. Some were weaker than others, but all had been broken. In the first half of the week, the forint exceeded the 381.95–383.25 and 383.76 resistance levels. On Thursday, it left the 383.75 moving 30-day average. Later, the weaker resistance level of 386/EUR fell and, on Friday, the stronger one at 389/EUR.

Apart from government and national bank statements, another reason for the forint weakening was the strengthening of the US dollar. That is because more and more Fed officials talk about higher interest rates than expected before. Since investors search for such assets, they acquire dollar, keeping its currency exchange rate high. That is bad news for emerging currencies like the forint.

According to Világgazdaság, the forint may continue to weaken next week without any external impulses. That means it will probably reach the 395/EUR level. Another bad news is that the so-called golden cross appeared on the dollar graph, meaning the 50-day moving average closes above the 200-day moving average. Furthermore, the forint may drop out from the league of carry traders because of the expected decrease of interest rates.

People have spoken: 2/3 of Hungarians would introduce the euro

forint euro bills

Support for Hungary’s membership of the EU is stable at over 70% in the country. According to those polled, the EU nowadays stands mostly for the protection of democracy and the rule of law, for working and learning in the EU and for improving the living standards of EU citizens. A two-thirds majority backs the introduction of the euro.

Policy Solutions study

The level of knowledge about the European Union is a significant determinant of the level of support for EU membership among Hungarians. According to a study published by Policy Solutions on Wednesday, the results of the EU knowledge test show that the higher the level of knowledge, the higher the proportion of pro-EU and the lower the proportion of those who are undecided on the HUXIT issue.

Main disadvantages of EU membership

Hungarians see membership of the EU as beneficial primarily for financial reasons. According to them, the main disadvantages of EU membership are excessive regulation, weakening of national sovereignty, migration, freezing of EU funds, sanctions policy.

The majority of Hungarians think Hungary receives more money from the EU budget than it pays in. However, 36% of those polled think Hungary has become a net contributor. The proportion of those who think Hungary is a net contributor to the EU budget has increased by 7 percentage points by 2023 compared to two years ago, Economx writes.

Direction of the EU

Hungarian society is strongly divided on the current direction of the European Union: 44% say things are going in the right direction, 47% say they are going in the wrong direction. According to Hungarians, in 2023, the EU mostly represents the protection of democracy and the rule of law (35%), the freedom to work, study and travel within the EU (28%) and the improvement of the living standards of EU citizens (25%).

Euro introduction supported

In 2023, the EU is most expected by both government and opposition parties to represent the value of peace. 44% of respondents put peace in the top three most important values, 35% said improving the living standards of citizens, and 31% said the EU should mainly stand for democracy and the rule of law in the future.

A two-thirds majority backs the introduction of the euro.

The majority also supports Romania’s accession to Schengen and the creation of a common European army. Hungarians would spend EU funds primarily on health care and catching up disadvantaged regions. Hungarian society is open to further EU enlargement, but the majority is against Ukraine’s EU membership.

The majority of government parties also believe that all milestones should be met to access EU funds. The suspension of the Erasmus programme is dividing society.

Read also:

Market leader Porsche subsidiary introduces the euro in Hungary

Euroisation euro forint

More and more signs make it clear that spontaneous euroisation began in Hungary because of the volatile forint. But a German carmaker made that official. The price of some of its new car types is only in euros. Of course, customers have to pay in forint. But it is easier to “freeze” the price in a less volatile currency than regularly changing it.

As we wrote in THIS article, more and more Hungarians are keeping their savings in foreign currencies, mostly in the EU’s official currency. That is because of the volatile exchange rate of the forint. As we wrote earlier today, the Hungarian national currency did not need much to lose some of its value. A clash between the finance minister and the national bank governor was enough for it to leave the 380-385 level and approach the 390/EUR psychological barrier.

Therefore, it is not surprising that not only people but also companies believe that keeping money in forint or sharing the price of valuable cars in forint is no longer reasonable.

Portfolio, a Hungarian economic news outlet, said Porsche Hungária no longer prices its new cars in forint. You may see forint prices only when buying an Audi or a Volkswagen commercial vehicle. If you opt for a new Volkswagen or Skoda, the price will be in euros. Of course, you will pay in forint, but the vendor will use the daily exchange rate to do the maths.

Read also:

Porsche says it was an economic decision

Porsche Hungária told Portfolio that they turned to euro-based pricing last December. The change concerns new Volkswagen, Skoda, Seat and Cupra cars. Audi and Volkswagen commercial vehicles’ pricing remained in forint. “That was an economic decision on our part”, the company highlighted.

The car’s price is fixed in euro, but the customers pay in forint, they highlighted. When they order the car, the price written in the contract is in euros. And that remains unaffected by the exchange rate changes until they get their new vehicle.

Viktor Zsiday, the portfolio manager of Citadella Fund, said that when different players of the Hungarian economy start to price in euro, that trend weakens the effect of the country’s economic policy. The more common a foreign currency becomes somewhere, the less influence the national bank can have on the economy. Spontaneous euroisation happens because the Hungarian economic policy makers abused their tools and intentionally weakened the forint.

Forint reacts badly to government tax increase plans – UPDATED

forint huf

The Hungarian government introduced several so-called windfall or excess profit taxes last year after Orbán won another supermajority in the general elections. Of course, all the companies concerned in the banking or retail sectors passed the burden onto their customers. The cabinet promised they would withdraw the extra tax soon after the economy stabilises. However, they remained and will remain in 2024. Furthermore, Hungary’s finance minister talked about increasing banking windfall tax, which hit the forint badly.

According to portfolio.hu, the finance minister, Mihály Varga, and the governor of the Hungarian national bank, György Matolcsy, clashed again at an economist conference in Eger, Eastern Hungary. Varga said the budget did not look good. Varga added they would like to keep the budget deficit below last year’s 6.2%. According to hvg.hu, this year’s budget deficit will be between 3.9 and 6.2%.

Varga said they might raise the banking windfall tax because those financial institutions have a high-profit rate. Furthermore, he talked about supervising state-supported loan programs, reducing the expenditures of the cabinet and suspending ongoing projects. He slammed some government and national bank decisions for the high inflation (e.g. the belated interest rate increase), adding that the core problem was the Hungarian economy’s energy dependency.

While Varga tried to be optimistic, Matolcsy was not. He slammed Varga, Orbán and the government for the “inflation catastrophe”. He called the high inflation an “economic mass accident”.

Read also:

National bank governor slammed the government and even Orbán

He blamed the government’s expenditure decisions between 2021 and 2022 for the high inflation, including the 13th month pension and a tax refund for the children-raising Hungarian families. That is why the inflation skyrocketed, and the government did not even support the fight against it. Matolcsy also blamed the price caps for inflation. He said their introduction fuelled the inflation trend by 3-4%. Matolcsy said the government’s economic policy was lightheaded, resulting in high inflation. He added that Orbán’s plan to double Hungary’s GDP by 2030 is impossible. It would need a 10% annual growth. But that would mean 6-9% inflation. Such a growth would be devoured because the previous cheap money era is over.

The clash between the minister and the governor and the minister’s plan to increase taxes had a considerable impact on the exchange rate of the forint. The Hungarian currency weakened and left the 380-385/EUR level. Portfolio said that provided that trend did not stop, we might reach the 390/EUR level soon. On Friday morning, for example, the rate was above 388/EUR.

Fidesz parliamentary group leader said the opposite

Meanwhile, Fidesz parliamentary group leader Máté Kocsis denied that there were plans to raise the windfall tax on banks. He added that this was the group’s position and all statements that differ from it should be regarded as personal opinions. Lending needs to be increased in 2024 and this requires subsidised loans and banks. Tax increase would go against this, so it would not be realistic, he added.

Commenting on central bank governor György Matolcsy’s remarks on the government’s economic policy, he said there was a debate between the government and the central bank governor in certain economic policy issues, MTI wrote. “It is a good and inspiring debate and should not be regarded as a reason to project the end of the world,” he added.

UPDAE – Finance ministry: Budget ensures resources even during wartime

The budget ensures the resources necessary to maintain the regulated utilities price scheme for households, protect the security of the country, and defend family subsidies and pensions, even during wartime, the finance ministry said on Friday. Hungary’s cash flow-based general government balance reached 3,298.7 billion forints (EUR 8.5bn) at the end of August, the ministry confirmed in a detailed release of data. The deficit widened from 2,940.3 billion forints at the end of July. The central budget deficit reached 3,330.8 billion forints at the end of August and the social security funds were 93.0 billion forints in the red. Separate state funds had a 125.1 billion forints surplus.

“In addition to the extraordinary expenditures, the budget continues to pre-finance European Union programmes, the resources for which Brussels is keeping from Hungary for political reasons,” it added. The ministry noted that spending on European Union-funded programmes came to 1,813.8 billion forints in January-August, while transfers from Brussels reached just 1,040.9 billion forints. Expenditures related to the regulated utilities price scheme for households came to 1,085.1 billion forints by the end of August.

Expenditures on compensation for suburban and long-distance public transport reached 440.5 billion forints. “In spite of the unfavourable international circumstances, the government remains committed to reducing the deficit and state debt level from year to year,” the ministry said. The full-year deficit target is 3,400.2 billion forints. The deficit reached 4,753.4 billion forints in 2022.

Fragile forint: Spontaneous euroisation in Hungary?

euro money chinese loan fine

Due to the socio-economic challenges of recent years, people are trying to be more conscious about their savings. A significant part of the population has shifted from bank deposits and cash to investments. In addition, the phenomenon of euroisation in savings is gaining momentum. Thus helping to protect the value of savings by hedging against the weakening of the forint. This data was revealed by a survey commissioned by NN Insurance.

Outstanding savings rate in Hungary

Mfor.hu reported Hungary has an outstanding savings rate in the EU. According to Eurostat data, the savings rate of the Hungarian population rose from 9.6% to 19% by the beginning of 2023. This puts Hungary among the EU leaders, with only Germany (20%) boasting a better savings rate. The significant increase is mainly due to high inflation. A high-yield environment and fluctuations in the forint exchange rate have effectively forced people to make more sensible choices and more sophisticated financial solutions, in addition to reducing consumption.

New forms of savings

Recently, there has been a shift in household savings from simple bank deposits and cash towards various types of investment and self-care, including foreign currency-based schemes, in recent months. According to the Hungarian National Bank (MNB), in the first half of this year:

  • Household current account deposits and cash holdings fell significantly, by 9 and 4% respectively between end-2022 and mid-2023. This is hardly surprising, given that the return on money in the bank is minimal and inflation is in double digits.
  • The amount of money held in government securities and mutual funds jumped by 14 and 20% respectively over the same period.
  • Meanwhile, the amount of sums held in life insurance policies offered by market operators rose by 4% and the total value of voluntary pension funds by 7%.

Rising euroisation

Hungarian households are also exposed to fluctuations in the value of the forint. The depreciation of the forint is even more dramatic when it come to years of savings. In order to be shielded from this risk, people are saving in other currencies, such as the euro. According to MNB, in the second quarter of 2021, households held HUF 368 billion (EUR 959,471,864) in euro savings. Meanwhile in the same period of 2023 they held HUF 482 billion (EUR 1,256,699,561). This is a 25% increase in euro terms, even taking into account the exchange rate change over time (from EUR 350 to EUR 370).

The phenomenon of euroisation – when people in a country spontaneously start using the euro in their daily lives – and the increased demand for euro-based savings is also highlighted by a survey by NN Insurance. 60% of respondents expressed that they would feel more comfortable and safe if they could keep their savings in euros. Therefore, providers have to keep up with this demand.

Read also:

Watch out! New forint coin introduced – its shape is hexagonal

New forint coin

The Hungarian National Bank introduced a brand new forint coin with a unique shape. Here is how much it is worth.

According to Pénzcentrum, the national bank introduced its brand-new coin yesterday. Its name is “Lovarda” (stable), depicting one of the most imposing buildings of the Buda Castle, the Royal Stables. The coin is made from non-ferrous metals, and enriches the memorial coin series of the National Hauszmann Programme (NHP). HERE is our article about the beautifully renewed Royal Riding Hall in the Buda Castle.

The NHP aims to carry out the rebirth of the Buda Castle District. It comprises the tidying up of public spaces, parks and castle gardens, rebuilding of the Guardhouse and the Riding Hall and the redesigning of the previously demolished buildings. Decision-makers, builders and creators would like to restore the Castle to the people of Hungary and to create a place in the middle of the capital that has a “call”, where everyone can feel at home again, the programme’s website said.

Interestingly, the new, hexagon-shaped coins can be adjusted to one another, forming a unique honeycomb structure. The new coin is worth HUF 3,000 (EUR 7.8) and was designed by Zoltán Endrődy, a well-known Hungarian industrial artist.

Read also:

  • Do THIS in the Buda Castle and get lucky until you can: the minister wants to ban it
  • VIDEO, PHOTOS: Castle for sale on riverbank in Hungary – now at a discount!

Royal Stables, a jewel of the Buda Castle

The original Royal Stables was built between 1899 and 1901 following the designs of Alajos Hauszmann. In front of it was placed György Vastagh Jr’s statue of a traditional Hungarian herdsman. Before WWI, only the royal family could use it. Between the two world wars, it was opened to the public. During the siege of Budapest in 1944-1945, it was damaged, and the Communists taking power after 1945 demolished it because of ideological reasons. Between 2019 and 2021, the building was beautifully rebuilt. Here are some photos of it:

The “Lovarda” coin is the Hungarian National Bank’s second coin in a series, showing the building renewed in the NHP programme. It aims to draw attention to the jewels of the Buda Castle. Based on the plans, a new coin will appear each year, but they will not play a considerable part in the cash flow.

New coin made of special alloy

The current coin will be unique thanks to its hexagonal shape. As a result, all 3,000 can be adjusted to each other, forming a honeycomb structure. The structure’s advantage is that it provides the maximum surface to the minimum perimeter. Therefore, it is statically very stable.

In the forefront of the coin, you may find the Royal Palace, while on the back, it is the Royal Stables with György Vastagh Jr’s statue. 89% of it is copper, 5% is zink and 1% is tin. That alloy is the so-called Nordic gold. It weighs 20 grammes, and 20,000 will be produced with proof-like technique. Here is a photo of it:

You may buy the new coin for HUF 3,000 until 15 September 2024 in the shop of the Hungarian Mint Ltd near Szabadság Square and on the mint’s webshop (HERE). Furthermore, you may also buy it in the gift shops of the Buda Castle.

Dark prophecy for the Hungarian forint: 400 EUR/HUF soon?

euro forint 400

Equilor Investment Consultant Ltd. expects the forint to continue losing value in the coming months. We may see a 400/EUR exchange rate by the end of this year. Having said that, it was also revealed at a press event on Wednesday morning that Equilor does not expect the recession in Hungary to ease by the third quarter of this year. However, the Hungarian economy as a whole could still contract by 0.7%. Although inflation is slowing, it could still be high in 2024.

As we have reported HERE, the forint has been in a steady decline since mid-summer; it fell to the 375/EUR zone. On Wednesday, it was sitting at 385/EUR, and it is still on a downward slope, according to analysts.

Current Hungarian economic climate

As Porfolio reported, the recession may not end until the third quarter of this year. Several factors play a role in this negative trend, but the most prominent of all is the country’s sky-high inflation, which has profoundly destroyed consumer confidence. The fact that the government is further postponing investments does not help either. On top of that, it is understood that a new tax adjustment may be on the cards, too.
Besides all that, Germany’s industrial scene is also struggling. As the most important export market for Hungary, the country’s weak industrial performance has a direct impact on the domestic economy.
On the positive note, real wages are slowly turning upward, while interest rates began to drop. Thus, the economy could likely reboot next year. Another good news is that inflation may be in a single digit by November, while annual inflation could be around 6% next year (compared to this year’s 18%).

Nightmarish forint exchange rate

The high interest rates still support the Hungarian currency, thanks to the proactive measures of the Hungarian National Bank. Although the Hungarian government has lowered the key interest rate significantly, it is still twice as high as the Czech/Polish key interest rate. THE weakening of the forint could be also caused by the faster than expected interest rate cuts. The unfavourable macroeconomic climate (e.g. the recession along with the budget deficit) and the intensifying conflicts with the EU (and with the US) also take a toll on the fragile Hungarian currency.  Only sustainedly high interest rates and a snippet of good news on EU funds could bring about some strengthening at this point. Therefore, Equilor expects the forint to weaken further. It cannot be ruled out that the Hungarian currency may reach the 400 threshold against the euro next year.

In addition, the global real interest rates are not expected to return to the low levels seen in the 2010s, which will also limit the National Bank’s room for manoeuvre.

High inflation and interest rates have held back investment as well as consumption, while the backlog of EU funds is prompting greater difficulties than expected for the Hungarian economy – Equilor analysts said.

Conclusion

There is still a good chance that the forint will close this year below the 400/EUR level, but by the end of 2024, it could further plummet. In a particularly dim scenario, in 2025, it could drop to 405/EUR.

Hungarian budget deficit 3,298.7 bn in August

forint exchange rate money

Hungary’s cash-flow deficit was HUF 3,298.7 billion at the end of August, up from 2,940.3 billion at the end of the previous month, the Finance Ministry said in a first release of data on Friday.

The central budget posted a shortfall of HUF 3,330.8 billion at the end of August, with social security funds 93 billion in the red, while separate state funds had a HUF 125.1 billion forint surplus.

The ministry pointed to financing for household energy subsidies, security spending and family benefits and pensions amid the strained circumstances of war and sanctions as contributors to the shortfall. It also mentioned pre-financing for European Union programmes.

EU programmes were worth HUF 1,813.8 billion in January-August, while transfers from Brussels were worth 1,040.9 billion.

Spending on household utility subsidies came to HUF 1,085.1 billion by the end of August.

The ministry said the government was committed to reducing the deficit and public debt from one year to the next.

The full-year deficit target is HUF 3,400.2 billion in Hungary.

Forint takes a big hit: sharp weakening in a short time

On Tuesday, the forint weakened by 1.5-2% against the major currencies compared to its early morning quotation on the interbank foreign exchange market. In the evening, the EUR/HUF exchange rate stood above 387.

The euro was quoted at HUF 387.86 at 6 PM on Tuesday, down from HUF 382.15 early in the morning, privatbankar.hu reports.

The dollar rose to HUF 361.49 from HUF 354.20 and the Swiss franc to HUF 406.75 from HUF 400.11.

According to Tőzsdefórum, yesterday, the EUR/HUF crossed even the 388 level. The last time the forint was this weak was in mid-August, when a rapid rebound followed the fall.

As we reported yesterday, according to Bloomberg, the Hungarian state may buy a majority stake in Budapest Airport. This has been rumoured for more than 3 years; however, there is currently no information on the expected value of the transaction (Bloomberg speculates that the transaction could be worth up to EUR 4 billions). However, analysts believe that this news could also have a weakening effect on the forint, as the possible purchase could weaken the Hungarian budget balance.

Read also:

Forint jumps to a peak after major decision of central bank

forint euro bills

On Tuesday, the Hungarian central bank announced that it would cut the policy rate by a further 100 basis points, bringing it closer to the base rate. In its communication, the central bank stressed that it will continue to move cautiously on the interest rate path. Thanks to this, the forint strengthened, reaching below 380 against the euro, a one-month high.

The Monetary Council decided on Tuesday to set the key interest rate at 14% from Wednesday, Index reports. At the same time, the national bank left its base rate unchanged at 13 percent, in line with analysts’ expectations.

Even before the central bank’s decision, the forint strengthened, rising from 383 against the euro on Tuesday morning to close to 381 around noon. The forint rallied even further after the background discussion following the interest rate decision, reaching HUF 380.87 to the euro at 4 PM.

Following the central bank’s interest rate decision, the forint hit a one-month high against the common European currency.

On Wednesday morning, the Hungarian currency continued to gain momentum, reaching HUF 380.32 per euro at 10.30 and even dipping below 379 at around 12.15 PM.

Was it not the central bank’s decision that strengthened the forint?

“The forint reacted neutrally to the expected interest rate decision and to the central bank’s continued emphasis on caution,” Gergely Suppan said in an analysis sent to Index. “The forint responded to the sharp weakening of the dollar with a strong gain, breaking the 200-day moving average,” said the senior analyst at MBH Bank.

He detailed that the dollar weakened sharply against the euro and major currencies on the back of a sharp fall in job vacancies and consumer confidence, which lowered expectations of interest rate hikes. Meanwhile, the zloty stagnated and the Czech koruna strengthened slightly, Index adds.

Currency exchange at 12.25

EUR/HUF: 379.02

USD/HUF: 348.19

Read also:

Here is the central bank’s big decision, forint getting stronger

Hungarian National Bank György Matolcsy hungarian government

Hungarian central bank (NBH) rate-setters kept the base rate unchanged at 13.0 percent at a regular policy meeting on Tuesday.

At the same time, the Monetary Council decided to narrow the interest corridor further, the upper band lowered by 100 basis points to 16.5 percent. The forint continued to strengthen after the national bank’s decision. Currently, we have to pay 381.5 forint for 1 EUR. As we wrote in THIS article, the markets already priced the consecutive quick deposit rate decreases.

Government earmarks HUF 2 bn for Hungarian orgs across borders

Hungary’s government has earmarked two billion forints (EUR 5.2m) for supporting Hungarian organisations across the borders, the state secretary for Hungarian communities abroad told a press conference on Tuesday. The Caring Nation programme received 4,109 applications from the Carpathian Basin and Hungarian diasporas by the June 5 deadline, Árpád János Potápi said. The government will support 62 percent, or 2,571 applications, he said.

Fully 1.5 billion forints were earmarked to support operational costs and development such as the ice rink in Carta (Csikkarcfalva) in Transylvania. Another half a billion is going towards organising events and programmes such as the Harmony – Music Awards for Slovakia Hungarians, he said. Most of the bids for funding arrived from Transylvania, he said. The government is working to maintain its strategic goals despite the difficult economic situation and the war, Potápi said. It continues to bolster institutions across the border and maintain the network created during the thematic years organised to support various aspects of life, he said.

Read also:

Another goal is to support cooperation among micro-communities, he said. The Fidesz government has spent more than 500 billion forints on supporting some 34,000 organisations across the borders since it came to power in 2010, he said. More than 300 billionn forints has been ploughed into 5,400 investments, he added.

New gold and silver forint coins issued in Hungary

New forint coin will appear in Hungary

The Andrew I commemorative coin is the most valuable of the 2023 commemorative coin programme, the Hungarian National Bank wrote in a Facebook post.

According to the central bank, the coin will commemorate the reign of Andrew I (1046-1060), who terminated the civil war that started after the death of the first Christian king, Stephen I (997-1038). He managed to preserve the independence of the Hungarian state and Catholic church from the Holy Roman Empire. Furthermore, the first foundation charter of the Abbey of Tihany was issued during his reign. The charter is of great importance since it contains the first Hungarian words written in Latin, precisely 58 of them. A few examples are Fehérvár (Székesfehérvár mentioned as FEHERUUARU), hadiút (military road mentioned as HODU UTU) and vár (fort used as UARU). You can learn more about the fascinating history of the charter HERE.

Read also:

  • The national bank introduced new forint coins in Hungary! Read more HERE

Gold and silver forint coins

Thus, we Hungarians can be proud of Andrew I and his reign. The national bank issued the new coins on 21 August, and it is part of the founding kings from the Árpád dynasty series. It has three variations: gold, silver and non-ferrous metal. The design remained true to the age and was made by András Szilos, a Hungarian metalwork design artist. Here is a photo:

And HERE you can read an article about Andrew II, the only Hungarian monarch who lead a crusade to the Holy Land.