The National Bank of Hungary (NBH) has fined OTP Bank and MBH Bank, the country’s two biggest commercial lenders, more than HUF 43m (EUR 103,440) for failing to take all required steps to correct shortfalls regarding the prevention of money laundering and financing of terrorism, the central bank and financial market regulator said on Tuesday.
The NBH had instructed the lenders earlier to take remedial measures because of the regulatory shortfalls. Due to the deficiencies found, the supervisory authority imposed a total of HUF 15 million on MBH Bank and HUF 28.125 million on OTP Bank, and ordered them to correct the deficiencies. The deficiencies do not jeopardise the safe operation of credit institutions, the central bank said.
The MNB found that OTP Bank continued to fail to fully comply with retrospective screening and proper monitoring in its electronic money issuance activities for one product, while the methodology adopted by the bank did not comply with the risk-based approach. Due to the incorrect setting of the filtering system, OTP Bank’s internal audit did not take into account the reports on trends and risks prepared by its AML/CFT unit when examining the filtering system scenarios, their modifications and the threshold settings, they wrote.
The bank continued to fail to adequately verify information on the source of funds in its customer due diligence for customers subject to the enhanced procedure who had previously been subject to money laundering notifications and whose cash payments were equal to or exceeded HUF 10 million. As OTP Bank did not comply or did not comply adequately with several of the requirements of the Decision, some of the related internal controls required by the Decision could not be properly implemented.
The investigation revealed that, despite the obligation, MBH Bank still did not provide in its internal rules on screening for specific processing rules for alerts generated on the accounts of fiduciary clients and the sub-accounts used to record the assets managed by them, nor did it ensure that alerts based on the same risk basis were treated in the same way, due to a lack of adequate controls.
Furthermore, despite the previous obligation, it did not employ sufficient staff to guarantee the analysis and evaluation of the transactions filtered when processing the alerts generated by the filtering system within the time limits laid down by the legislation. In addition, MBH Bank did not establish adequate policies and practices for obtaining information and documentation on the source of funds by the previously established deadline,” they wrote.
In 2022-2023, the central bank’s most important task was to maintain stability. In an unprecedented, extremely turbulent environment, it was necessary to continuously make calm, considered and correct decisions, National Bank of Hungary (NBH) deputy-governor Barnabás Virág said on Wednesday.
Speaking in parliament while presenting the NBH‘s 2022 and 2023 business reports, Virág said that in 2022 inflation was in the double digits in almost 90 countries, including Hungary. The central bank therefore could have no other goal than to stop high inflation and bring it down as quickly as possible.
He noted that after inflation climbed to 24.5pc in 2022 it fell back to 5.5pc by December 2023.
Speaking about the stability of the financial system, Virág said despite challenges the stability of the domestic financial system was never in question for a moment.
In his speech Virág referred to the NBH injecting HUF 11,000bn into the Hungarian economy through various programmes, raising awareness about competitiveness, launching the Green Home Programme and supporting digitalisation efforts in the financial system.
The deputy-governor noted that in 2022 the NBH registered a HUF 402bn annual loss for the year which climbed to HUF 1,700bn last year. He noted that as the central bank is a special institution, its results do not characterise its operation, but rather reflect economic circumstances and that it does not have a profit target.
The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base rate unchanged at 6.50pc at a monthly policy meeting on Tuesday.
The National Bank policy makers left the base rate on hold at the previous two meetings, in October and November, too.
The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank’s symmetric interest rate corridor.
In a statement released after the meeting, the Council said the expected interest rate paths and future fiscal policies of major economies are still surrounded by uncertainty. Ongoing geopolitical tensions are raising upside risks to inflation through risk aversion towards emerging markets. Looking ahead, a careful and patient approach to monetary policy is warranted. In the Council’s assessment, geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warrant further pause in cutting interest rates.
“In the current macroeconomic environment, the Bank can make the most effective contribution to the easing of economic agents’ increased precaution and to the restart of economic growth by maintaining price stability and financial market stability” the policy makers said.
“Restrictive monetary policy contributes to the maintenance of financial market stability and the achievement of the inflation target in a sustainable manner by ensuring positive real interest rates,” they added.
The NBH said it considers it crucial that short-term interest rates develop consistently with the level of interest rates determined by the Council in every sub-market and in every period. In line with its earlier practice, the Bank pays special attention to the expected state of the FX swap market at the end of the year. To ensure the effectiveness of monetary policy transmission, the NBH smooths movements in financial markets by using instruments with longer maturities in December, in addition to one-day FX swap tenders announced on a daily basis and weekly discount bill auctions.
At a press conference after the meeting, deputy governor Barnabás Virág said the expected inflation path for 2025 has shifted higher, and a persistent return to the 3pc inflation target has been delayed to 2026. He noted that despite the delay, inflation will remain within the tolerance band for most of 2025.
Citing the projections in the latest quarterly Inflation Report of the NBH, Virag said average annual inflation is set to reach 3.6pc-3.7pc this year. In the previous report, published in September, the NBH had put 2024 average annual inflation at 3.5pc-3.9pc.
The NBH forecasts average annual inflation of 3.3-4.1pc for 2025 in the fresh report, up from 2.7-3.6pc in the previous one, and between 2.5-3.5pc for 2026 and 2027.
The report also says that the Hungarian economy is expected to grow by 0.3-0.7pc in 2024. The NBH forecasts 2.6-3.6pc GDP growth in 2025, 3.5-4.5pc in 2026, and 2.5-3.5pc in 2027.
Virag said in 2024 Hungary’s economy will expand more moderately than expected. The subdued growth is due to factors beyond the scope of monetary policy, like agriculture output, German industrial production and postponed investments. From 2025 onwards, economic growth will be based on increasingly broad foundations and the economy is projected to enter a dynamic phase of growth from the middle of the year again.
Answering questions from journalists, Virag said a vast majority of rate-setters voted to keep the base rate unchanged and one member of the Council voted to cut the base rate by 25bp.
As we wrote yesterday, the future president of Hungary’s National Bank revealed key objective,s and his team, details HERE.
The primary goal of Hungary’s National Bank is achieving and maintaining price stability; it is committed to its 3pc inflation target, Finance Minister Mihály Varga said on Monday before parliament’s economy committee as a candidate to lead the NBH.
The independence of the NBH is guaranteed by both the act on the Central Bank and the effective regulatory system of the European Union, he said. At the same time, he added that for sustainable development and a predictable economic environment, the central bank cooperates with the government and domestic and international organizations with mutual respect for their respective mandates.
Varga said that under his leadership the NBH will treat performing classic central bank responsibilities as priorities while activities outside of this will be moderated. At the meeting, Varga introduced his future central bank team members but did not disclose their expected positions. The team will include Péter Benő Banai, the state secretary for the budget, Government Debt Management Agency (AKK) head Zoltán Kurali, and state-owned Hungarian Development Bank (MFB) CEO Levente Sipos-Tompa. The committee supported the appointment of Varga as NBH Governor by a majority vote.
The committee supported the appointment of Varga as NBH Governor by a majority vote. The minister said his commitment to maintaining the 3pc inflation target is a clear and unambiguous message that helps anchor the expectations of consumers, businesses, and financial market participants. Speaking about the prospects of the Hungarian economy, Varga said the economy is on a strong foundation, inflation is within the target range of the central bank, the current account is expected this year to have a 2pc surplus compared to GDP.
The liquidity of households, companies, and the banking system is robust, and the financial system is stable. The basis for economic growth in 2025 is rising consumption, expanding retail lending, growing construction order stock, and new manufacturing capacities coming online. Monetary policy can best contribute to growth by maintaining persistently low inflation and financial market stability, he said. A stable exchange rate and financial markets are priorities for ensuring price stability. Stable and predictable exchange rate is needed for sustainable economic growth.
Varga said that under his leadership the NBH will give a decisive response to risks threatening the financial transmission system, financial stability and sustainable economic development. Varga said he will place strong emphasis on the management discipline of the central bank and ensuring that the central bank operates in a transparent and professional manner. Responding to questions regarding the central bank’s foundations and real estate assets, Varga said that the situation will be reviewed after he takes office in March.
Fitch Ratings on Thursday affirmed the BBB long-term issuer default ratings of state-owned Magyar Eximbank and Hungarian Development Bank (MFB) and revised the outlooks on the ratings to stable from negative.
The ratings agency also revised Erste Bank Hungary’s and Kereskedelmi es Hitelbank’s (K+H Bank) outlook to stable from negative, while affirming their long term-issuer default rating at BBB+ and shareholder support rating (SSR) at bbb+.
In addition Fitch revised the outlook on MVM’s long-term issuer default ratings (IDR) to stable from negative and affirmed the IDR at BBB.
The rating actions followed the revision of the outlook on Hungary’s BBB sovereign rating to stable from negative on December 6.
UPDATE: K+H Bank to get new CEO
Belgian-owned K+H Bank announced a new CEO on Friday. Peter Roebben, the current CEO of the KBC Group’s Bulgarian unit, will take over from Guy Libot as of January 1. Peter Roebben has filled various positions at KBC since 1991. Guy Libot will fill a new senior management position within the group from February 1. 2025.
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The National Bank of Hungary (NBH) on Friday said it fined insurer Groupama Biztosító little over HUF 51m for compliance violations.
The central bank and financial market regulator found regulatory shortcomings related to Groupama Biztosító’s non-life insurance claims settlements, insurance portfolio management, IT security, outsourcing and customer information and complaint management.
The NBHlevied a HUF 49.5m supervisory and a HUF 1.6m consumer protection fine and ordered the insurer to correct the shortcomings.
Photo: FB/Groupama
Opus Global profit above HUF 30bn in Q1-Q3
After-tax profit of listed holding company Opus Global edged down 0.7pc year-on-year to HUF 30.4bn in the first three quarters of the year, an earnings report posted on the website of the Budapest Stock Exchange shows. Sales revenue was down at HUF 421bn from HUF 480bn while total operating income slipped 12.1pc to HUF 449bn. Operating costs fell 12.9pc to HUF 417bn, lifting operating profit by a fraction to HUF 31.9bn.
Financial profit of HUF 3.4bn, down by 15.2pc from the base period, also boosted the bottom line. EBITDA increased 4.1pc to HUF 68.4bn. Opus CEO Lélfai Koppány said in a separate statement that the first nine months of the year clearly show that serious efforts are needed to offset the difficult economic situation, but this has been successfully achieved by rationalizing costs. It is important to see that the strategy built on a diversified portfolio is working well at the group level. Opus Global has businesses in energy, tourism, industrial production and the farm and food sector.
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.”
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.
Mihály Patai, a deputy governor of the National Bank of Hungary (NBH), was the only member of the central bank’s Monetary Council to vote for a rate cut at a monthly policy meeting in November, the minutes of the meeting released on Wednesday show.
Eight of the Council’s nine members voted to keep the base rate on hold at 6.50pc at the meeting on November 19. Patai voted for a 25bp cut.
“Decision makers underlined that geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warranted a further pause in cutting interest rates,” according to the minutes.
Members stressed that sentiment on international financial markets had been volatile since the October policy meeting, and risk aversion towards emerging markets had increased in parallel with the appreciation of the dollar.
Members were in agreement that financial market stability remained “a key factor” in terms of price stability.
Discussing domestic inflation developments, the Council concluded that the consumer price index had risen slightly but remained below expectations in October, reflecting declining price growth in market services.
Based on real economic developments, the inflation outlook and the assessment of the risk environment, members concluded that subdued economic growth in Hungary was largely fueled by such factors as weak agricultural performance or subdued external activity which fell outside the scope of monetary policy.
Based on official data, the Hungarian National Bank bought 15 tonnes of gold in the third quarter of this year. That means Hungary has emerged to the 2nd position in the global gold purchase market. Furthermore, the Hungarian National Bank’s gold reserve grew to 110 tonnes, a historic high.
The Hungarian National Bank acquired lots of gold
According to Népszava, in Q3 2024, the Hungarian National Bank became the 2nd strongest player in the global gold purchase market by acquiring 15 tonnes of gold. Poland bought 42 tonnes, while India only had 13 tonnes. Thus, Hungary could precede New Delhi.
Krisfót Juhász, a manager responsible for purchasing investment gold at Conclude Investments Ltd, said the national bank’s acquisition means the rate of gold compared to the country’s FX reserves grew to 14%.
Photo: MNB
The price of gold gradually increased this year by 30%. The price of gold overcame the gap between USD 1000 and 2000 in just under 15 years, while it took less than 10 months to bridge the gap between USD 2000 and the current peak of almost USD 2800 reached at the end of October. Goldman Sachs believes the price will reach USD 3,000 by the end of next year. Currently, it is at USD 2,650 because of Trump’s victory. Mr Juhász expects that gold prices will not grow significantly because the Trump administration is a supporter of digital currencies like Bitcoin, which reached USD 100,000.
Gold price decreases due to Trump’s victory
Mr Juhász said emerging economies like Azerbaijan, India, Poland, and Singapore invest their saved money into gold acquisition.
In Hungary, people buy gold because of the weak forint. Mr Juhász said that the moment the price of one euro rose above 400, Hungarians started to store the precious metal to secure their savings. He said it had not been rare recently in Hungary to meet buyers who took multiple kilograms of gold home.
The Hungarian National Bank’s gold treasure in 2020. Photo: FB/MNB
We detailed in THISarticle that PM Orbán nominated his old ally, Finance Minister Mihály Varga the new governor of the National Bank of Hungary. György Matolcsy’s term will end in March. Mr Varga is an economist and has been an MP since 1990. During the first Orbán government (1998-2002), he served as a finance secretary.
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National Bank of Hungary raisesgold reserves to 110 tonnes
Check out some photos of Hungary’s gold stored in the vaults of the Hungarian National Bank in THISarticle
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”.
Forint in trouble after Varga’s nomination? Photo: FB/MNB
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 NBHgovernor, 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 hitsnew low against the euro as exchange rate surges past 413
PM Orbán nominatednew Hungarian National Bank governor, forint strengthening, government change comes
“We have never been this close to peace, and the wartime situation has never been this dangerous,” Prime Minister Viktor Orbán said in an interview with public radio on Friday. The prime minister also said he has nominated Mihaly Varga to serve as central bank governor, adding that the incumbent finance minister has accepted the nomination.
As regards the Russia-Ukraine war, Orbán said “we’re in a very difficult and strange situation”, adding that there had been two recent reports which emphasised the responsibility of European politicians.
One of these, he said, was that Russia had “indeed launched an intercontinental ballistic missile capable of carrying nuclear warheads”. “If they use these, the war will escalate into a global conflict and will also have a nuclear dimension,” he warned. Orbán also cited Russian reports saying that American and French troops have also died in air strikes. “This goes to show the danger of the war’s escalation and expansion,” he said.
Photo: FB/Orbán
“This is an extremely dangerous moment,” the prime minister said, adding that he hoped that the “weapon demonstration” will urge the West to exercise caution.
Depressing developments in the European Parliament
Meanwhile, Orbán called Thursday’s developments in the European Parliament “depressing”, saying it was clear that many European heads of government wanted to continue the war “and even step up its intensity”. Orbán said that the EP adopted a resolution reinforcing its support for Ukraine in which it declared that “a pro-peace president may have won in America, but for now there’s still a pro-war administration in power”.
He said the “Trump effect” could not yet be felt, as the incumbent US administration was the one to decide on giving more funding to Ukraine.
“We have to survive the next 1.5-2 months,” Orbán said, noting that Hungary was engaged in “intense diplomatic efforts in the interest of a ceasefire and peace”. Orbán said he will speak with the president of the new European Commission on Sunday.
PM Orbán nominated Minister Mihály Varga as Hungarian National Bank governor
Concerning Varga’s nomination as central bank governor, Orbán said Varga was Hungary’s most experienced economist and politician dealing with economic policy.
“From January 1, we will undoubtedly be working under a different economic management system,” Orbán said, adding that he would be happy to discuss the details “in due course, in December”.
Highlighting the role of the central bank, the prime minister said the bank was key to the Hungarian economy, a “safeguard of stability”, an institution which had “the powers, skills, decision-making positions to preserve the value of the forint and to fight inflation.”
PM Orbán wrote in a Facebook post that Mihály Varga had already seen “a crow on a pole.”
Referring to his candidate for governor, he suggested Varga was one of “the most experienced and calmest” experts “who has been in difficult battles … and could stand his ground in any situation.” He said the position required “experience in economic policy, not just intellect,” adding that apart from Varga, the national economy and energy ministers had also been eligible candidates. He noted that Marton Nagy, the national economy minister, had served as deputy governor of the central bank before, but added that he had “resisted the temptation” of proposing Nagy for the post.
Orbán praises Matolcsy
Concerning the incumbent central bank chief, Orbán said György Matolcsy had done “quite an excellent and good job” in his position. He added that Matolcsy was “impulsive” and had “continuously sent impulses to the government”, and expressed his gratitude for Matolcsy’s “making proposals for the right decisions at the right moment”. He said it had been Matolcsy’s “heroic deed” to help forex loan holders “out of the trap many hundreds of thousands of families in central Europe had been caught in”.
The outgoing governor had “historic merits”, Orbán added.
Meanwhile, Orbán said that an increase in the minimum wage would push up all other wages as well. He suggested that the current wage increase was so large that during the combined three years it would amount to a 40 percent increase, which he said was not only unprecedented in the history of Hungary, but a wage increase of this magnitude had only occurred once in Europe.
He said he was proud of the agreement and the government’s contribution to the deal. He said the government sought to help employers through tax benefits to ensure that they can offer higher wages. He said he trusted that the trend would continue and the government’s goal to increase the average wage to one million forints a month could be achieved.
Mr Varga said he would serve Hungary’s stability and development:
4,800 days spent as minister
Finance Minister Mihaly Varga said on Friday that he is accepting the nomination for the position of governor of the National Bank of Hungary (NBH). “I accept the honourable request of the Prime Minister with gratitude. I will continue to serve the stability and prosperity of Hungary with my future work,” Varga said in a post on social media. He noted that it has been a great honour for him to serve his country for 4,800 days, first as national economy minister then as a finance minister.
Mihály Varga. After his nomination, a government change will come but Orbán will only chare the details about it in December. Photo: MTI
Forint eases on interbank forex market
The forint traded at 412.96 to the euro around 10:00 in the morning on Friday, edging down from 412.84 late Wednesday. The forint firmed to 390.60 from 391.38 against the dollar. It eased to 443.38 from 442.95 to the Swiss franc.
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Hungarian banking system declared stable and highly profitable in latest central bank report – read more HERE
Hungarian forint hitsnew 2-year low against the euro, attempts to recover
The Hungarian banking system remains “stable” and “resilient to shocks”, while bolstered by “outstandingly high profitability”, Zita Fellner, a senior economist at the National Bank of Hungary (NBH), said presenting a report on Wednesday.
Fellner pointed to the ample liquidity, adequate capitalisation and the high quality of loan portfolios of local lenders, highlighting the key messages in the central bank’s latest Financial Stability Report.
She said the local banking sector would meet regulatory requirements on liquidity and capital adequacy even in the event of a severe shock. Lending capacity of the banking system is “abundant” and no credit supply constraints can be identified, she added.
Local lenders’ earnings reached a historical high of HUF 934bn in the first half of 2024, partly due to volatile and one-off items, she said. NPL ratios in the corporate and retail segments reached historical lows of 3.8pc and 2.3pc, respectively, she added.
She acknowledged that the quality of the corporate loan portfolio could be at risk from the depreciation in the commercial real estate market through bank collateral values, but said those risks were mitigated by the fact that the market may have reached the bottom of the cycle.
Earlier identified risks have abated, she said, noting low jobless rates, low levels of credit among companies under liquidation and the extension of the deadline for borrowers of prenatal baby support credit to fulfil their pledges to have children.
Corporate lending growth continued to slow in H1, to 3.7pc for the whole portfolio and to 0.7pc for the SME segment, mainly due to weak demand, while supply-side conditions were a stimulus to growth, Fellner said. She put the annual growth rate of the corporate loan portfolio around 3pc, in light of the tighter supply of subsidised loan schemes, the lack of an upturn in investment loan demand and the high portfolio of liquid assets.
The retail credit market picked up in H1, supported by stable employment and real wage growth, she said. Home loan volume rose by a factor of 2.5, and the total retail lending portfolio could climb by 9pc for the full year, supported by improving macroeconomic fundamentals, restructured family subsidies and lower long-term yields, she added.
She estimated that around HUF 300bn could be rechanneled from voluntary pension funds to home purchases and renovation under a temporary government measure. Interest on and redemptions of retail government securities is expected to be over HUF 3,000bn in 2025 and around one-fifth of that could be used for big investments, she added.
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.
The National Bank of Hungary (NBH) has signed a five-year cooperation agreement with the PBC School of Finance of Beijing’s Tsinghua University, one of the top institutions of higher education in the world, the central bank said on Friday.
The agreement, which renews an earlier one from 2017, was signed during the NBH’sEurasia Forum.
Budapest Metropolitan Universityand Neumann János University of Kecskemét, partner universities of the NBH, also joined the cooperation. Working together, the sides aim to contribute to establishing a competitive education system, while paving the way for further chances to cooperate.
Professor Jiao Jie, the dean of Tsinghua University PBC School of Finance, was invited by NBH governor György Matolcsy to address the Eurasia Forum.
NBH governor György Matolcsy. Photo: MTI
Photo: MTI
Hungarians have to prove themselves in international competition, says Orbán
Hungarians have to “prove their excellence” not just in their own micro-communities, but also in international competition, Balázs Orbán, the prime minister’s political director and chairman of the Mathias Corvinus Collegium (MCC)’s board of trustees, said at the opening of the MCC’snew centre in Subotica (Szabadka), in the north of Serbia, on Friday.
Hungarians believe that in addition to its “beautiful thousand-year history and beautiful present, Hungary also has a glorious future before it”, Orbán said, adding that it was important that students, teachers and researchers also contribute to the Hungarian community’s prosperity.
He said that one of MCC’s goals was to aid the political and interest representation groups in northern Serbia’s ethnic Hungarian community by training the next generations of intellectuals.
The MCC is now represented in 31 locations across Hungary and the Carpathian Basin and works with some 8,000 students, he said.
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After the global financial crisis of 2008-2009, “it became clear that the West’s system of political and economic self-correction does not work,” Prime Minister Viktor Orbán said at the Budapest Eurasia Forum, adding that “new centres are emerging in the world, especially in Asia … as a result of which modernity is no longer an attribute of the West.”
Speaking at the National Bank of Hungary’s Eurasia Forum in Budapest on Thursday, Orbánsaid the first years after the political regime change of 1989 had been dominated by the ideal of the Western self-correction system which was believed to “guarantee our strategic security in the long run”. But in 2008-2009 it became obvious that “the financial crisis was in fact a logical consequence of deep changes in the global economy radically impacting geopolitical relations,” the prime minister said. That is why, Orbán added, Hungary’s focus has partly shifted to the East.
Photo: MTI/Miniszterelnöki Sajtóiroda/Benko Vivien Cher
Hungary ‘must be sharp, swift, smart’
Hungary must be “sharp, smart and swift”, open to the world and “must constantly think on its feet to grasp the right moment for necessary decisions”, Orbán said. “Timing is the main thing in politics … politics is the realm of practical implementation, and that hinges on timing,” Orbán said. “For a country the size of Hungary, missing the right time could be lethal.”
“A country the size of Hungary can’t be slow, dumb or boring, it cannot be a follower or rely on others’ understanding or interpretation … if it wants to live at the standards we want and live up to traditions like our 1,000-year history, it must be sharp, swift and smart, open to the world…” he said.
Europe ‘losing out on world changes’
Europe is losing out on the changes in the world, and “it could remain that way in the long run unless it finds its place in its relationship with Asia,” the PM said. “If it is true that the next century belongs to Eurasia, we must notice that Europe can’t find its place in that system,” Orbán said. He said some Western leaders failed to see Eurasia’s importance, while others “see it but don’t like it”.
He said the European elite was set up to protect the status quo, which could lead to blocs forming in trade, the economy and politics. Unless Europe can pivot to an approach promoting connectivity, its status as the loser in the new processes could be cemented, he said. “Europe must understand that it is part of Eurasia and use that to its advantage, as that is the only way to be competitive with other power hubs in the world,” he said.
Current changes ‘reversal rather than restructuring’
“What is happening nowadays is reversal rather than restructuring,” Orbán said, adding that “Europe and Asia in fact are an integral unit”.
Europe and Asia are not divided by geographical borders and historically, they have formed “a natural economic unit, complementing each other”, Orbán said. “Regions where civilisation, culture and economy thrived the most lived side by side here,” Orbán added.
Eurasia, as a natural economic unit, was hindered in past centuries by the focus of world trade shifting to the seas, and in the resulting dominance of Western civilisation, he said, adding that the trend removed a balance between civilisations to the West’s benefit. A third hindrance, Orbán said, was the Western elite’s decision after the Cold War “not to restore an organic Eurasian unity but to westernise the whole world”.
“We all feel that this attitude, this Western strategy, including Europe’s, is invalid and futile; something has ended here,” he said.
‘Century of Eurasia’ to come
Eurasia will dominate the next period, and Hungary will have to find its place rather than derive it from a European strategy, Orbán said. Hungary “is consciously implementing national and economic policy, where the fact that the country lies in Eurasia is a determining, albeit not exclusively important, factor,” Orbán said.
“We are the living Eurasian concept … as a people coming from Asia,” Orbán said. He said Hungary’s conflict with the European Union was rooted in its independent strategy founded on new realities and the recognition of a new set of opportunities “regardless of the Brussels doctrine”.
Matolcsy addresses Budapest Eurasia Forum
A new Europe can be born in the 2030s by reshaping the relations between member states, based on a new agreement, National Bank of Hungary (NBH) governor György Matolcsy said, addressing the fifth Budapest Eurasia Forum. Matolcsy said Hungary could play a leading role in a new, looser European organisation, creating a good merger of East and West, a new European Common Market.
Photo: MTI/Máthé Zoltán
The next 25 years, Matolcs said, will bring a world of wider opportunities in the areas of information, energy, finance and knowledge, while risks will also be stronger with climate change, new wars, social tensions and artificial intelligence. This duality must be exploited, he said. These years will be defined by the three big supertrends of geopolitics, strengthening climate change and the technological revolution, he added.
Calling for a change of strategy, Matolcsy said Europe should break with the idea of creating a United States of Europe and give up the vision of a global power and establish a new, horizontal network instead. Then high efficiency could replace the current low efficiency, he said.
The title of this year’s forum, “Keywords of success: talent, knowledge, technology and capital”, reflect the changes that have taken place in the economies over the past hundred years, while also showing the way to the future, the NBH said. Today, the most successful countries are those that can build the right combination of knowledge, technology and capital, driven by talent, which requires a supportive education system.
The Budapest Eurasia Forum 2024 once again brings together influential decision-makers, entrepreneurs, business leaders and academics to exchange opinions on the inevitable changes necessary to achieve sustainable development and to discuss the most pressing questions of our time, the NBH said.
Hungary’s room for manoeuvre ‘widened greatly’
Hungary’s room for manoeuvre has been greatly expanded in the past year, which has strengthened Hungarian communities across the borders, Prime Minister Viktor Orbán told a plenary meeting of the Hungarian Standing Conference (MÁÉRT) in Budapest on Thursday. The government has ploughed 1,374 billion forints (EUR 3.3bn) into policies supporting Hungarians across the borders, raising tenfold the support of the pre-2010 era, he told the meeting.
Additionally, it has spent 330 billion on 9,300 investments in the Carpathian Basin, he said.
Orbán said 2024 had been “the fullest year yet in the history of Hungarian diplomacy”. The Chinese president visited the country in May, Hungary recently organised a summit of the European Political Community and an informal summit of the 27 European member states, which adopted the Budapest declaration, “possibly the last attempt to save Europe’s competitiveness”, he said.
Through the US and European parliamentary elections, as well as the year’s successful diplomacy, Hungary managed to widen the scope of its foreign policy, he said.
The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base rate unchanged at 6.50pc at a monthly policy meeting on Tuesday.
Unchanged base rate
The policy makers left the base rate on hold at the previous meeting, in October, too.
The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank’s symmetric interest rate corridor.
In a statement released after the meeting, the Council said the increase in risk aversion towards emerging markets posed an upside risk to domestic inflation, while the interest rate paths of the biggest central banks were still “surrounded by uncertainty” and the external interest rate environment could ease “more slowly than previously expected”.
“In the current macroeconomic environment, the [NBH] can make the most effective contribution to the easing of economic agents’ increased precaution and to the restart of economic growth by preserving price stability and maintaining financial market stability,” the policy makers said.
“Restrictive monetary policy contributes to the maintenance of financial market stability and the achievement of the inflation target in a sustainable manner by ensuring positive real interest rates,” they added.
The Council said decisions on the level of the base rate would be taken in a “cautious and data-driven manner” based on the incoming macroeconomic and financial market data.
At a press conference after the meeting, deputy-governor Barnabás Virág said the Council had kept the base rate on hold in accordance with a “stability-oriented” approach. The current environment continues to require a “disciplined, restrictive and patient” monetary policy, he said. If warranted by the external environment and inflation outlooks, the base rate could remain at the current level for an “extended period”, he added.
He said that the central bank was ready to hold FX swap tenders and discount bill auctions and use long-term instruments to “smooth” financial market movements at the end of the year.
He said foreigners’ short positions had increased, while the stabilising behaviour of the domestic sector had mitigated the weakening of the forint. The Council continues to monitor closely factors behind the weakening of the forint, he added.
Keeping the base rate on hold was the only option discussed at the meeting and it was supported by a “large majority” of Council members, he said.
The National Bank of Hungary is set to release a remarkable gold collector coin, ‘V. László aranyforintja’ (The Golden Florin of Ladislaus V), on 20 November 2024. This stunning addition to the medieval Hungarian gold florin series comes in standard and piedfort versions—the latter weighing four times as much as a regular coin. Designed by sculptor Tamás E. Soltra, the coin will also be available in a non-ferrous version, making it an enticing piece for both collectors and history enthusiasts.
National Bank of Hungary releases new breathtaking coin
As Pénzcentrum reports, the National Bank of Hungary launched its ‘Hungarian Gold Florins from the Middle Ages’ series in 2012, beginning with the gold coin of Charles I, to showcase the high-quality medieval Hungarian currency that retained value and gained international acceptance. Subsequent coins have honoured notable figures, including Louis I, Queen Mary, Sigismund, and John Hunyadi, with the latest, ‘V. László aranyforintja’, set for release in 2024. Reflecting Hungary’s monetary heritage, these coins are issued in both gold and non-ferrous versions, sharing the same design but differing in denominations.
The obverse
As MNB writes, The obverse of the ‘V. László aranyforintja’ collector coin, issued by the National Bank of Hungary, features the reverse design of the gold forint originally minted by King Ladislaus V. At its centre is the figure of Saint Ladislaus I of Hungary, depicted holding a short-handled poleaxe and a globus cruciger, framed by an inner border. The outer edge displays a beaded border and the inscription ‘MAGYARORSZÁG’ (HUNGARY) at the top, while the coin’s denominations, ‘50000 FORINT’ and ‘3000 FORINT’, are elegantly separated by floral motifs.
Photo: MNB
The reverse
The reverse of the ‘V. László aranyforintja’ collector coin, issued by the National Bank of Hungary, features King Ladislaus V seated on a throne, inspired by an engraving from the 1488 Thuróczy Chronicle. The design includes the King’s coat of arms below the throne, the mint mark ‘BP.’ and the minting year ‘2024’ on the left, and sculptor Tamás E. Soltra’s mark on the right. Encircled by a beaded border, the legend ‘V. LÁSZLÓ 1453–1457 ARANYFORINTJA’ (LADISLAUS V 1453–1457 GOLDEN FLORIN) completes this intricate tribute to Hungary’s rich numismatic heritage.
The National Bank of Hungary celebrates 100 years of paediatric care with a stunning commemorative coin honouring the Hungarian Society of Paediatrics and its dedication to children’s health.
New coin issued by the National Bank of Hungary
As mnb shared, the National Bank of Hungary has unveiled a commemorative coin to mark the centenary of the Hungarian Society of Paediatrics. Presented at the Society’s jubilee general meeting in Debrecen, the non-ferrous metal coin, with a face value of HUF 3,000, is the creation of artist Andrea Horváth. This initiative honours the Society’s contributions to child health and welfare since its inception on 14 December 1924.
While the coin holds legal tender status, its intended value lies in commemorating this milestone and raising awareness of paediatric care. The coin is made of an alloy of copper (75%), nickel (4%) and zinc (21%), weighs 16 grams, has a diameter of 34 mm and a notched edge. In addition, the coin is a limited edition with only 10,000 pieces.
Hungarian Society of Paediatrics
The Hungarian Society of Paediatrics, founded by prominent figures such as Ármin Flesch, Pál Heim, and Ferenc Torday under the leadership of János Bókay, has supported the health of over 15 million children over the past century. Remaining steadfast in its principles of science-based medicine, safeguarding children’s health, and fostering a professional community, the Society continues to play a pivotal role in paediatric care. The National Bank of Hungary‘s commemorative coin further underscores these values, highlighting the Society’s enduring impact.
Photo: mnb.hu
The front of the coin
The National Bank of Hungary has released a commemorative coin celebrating the centenary of the Hungarian Society of Paediatrics, showcasing its legacy in advancing science-based child healthcare. The front of the coin highlights the Society’s therapeutic mission with a phonendoscope resting on two textbooks, alongside the inscriptions “HUNGARY,” “3000 FORINT,” the year “2024,” and the mint mark “BP.” The design, crafted by artist Andrea Horváth, includes her master mark on the spine of one of the books, symbolising precision and expertise.
The back of the coin
On the back, the coin features a doctor examining an infant, a nod to the Society’s official emblem and its commitment to paediatric care. Encircling this central motif are inscriptions of the Society’s full name and its motto, “100 YEARS OF CARING FOR CHILDREN,” connected by heart motifs to symbolise compassion. The commemorative coin underscores the National Bank of Hungary’s dedication to highlighting significant contributions to child health and family support over the past century.
