National Bank of Hungary

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

forint euro currency market economy

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.

forint euro currency market economy
Photo: depositphotos.com

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

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

Economic and geopolitical context

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

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

The trade-offs of a weak forint

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

Recent trends and outlook

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

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

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

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The National Bank of Hungary cooperates with Chinese university

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’s Eurasia Forum.

Budapest Metropolitan University and 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.

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’s new 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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Orbán at Budapest Eurasia Forum: Europe must adapt to Eurasian shift or face decline

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, Orbán said 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.

orbán matolcsy budapest eurasia forum (1)
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.

matolcsy budapest eurasia forum
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.

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Hungarian policy makers leave base rate on hold at 6.50pc

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.

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National Bank of Hungary introduces HUF 50,000 coin

National Bank of Hungary introduces HUF 50,000 coin

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.

National Bank of Hungary introduces HUF 50,000 coin
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.

National Bank of Hungary introduces HUF 50,000 coin
Photo: MNB

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National Bank of Hungary issues a new forint coin – Here’s how it looks

National Bank of Hungary issues a new forint coin

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.

National Bank of Hungary issues a new forint coin
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.

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Digital currency revolution: Hungary prepares for the future with a digital forint

digital currency money forint euro digital forint

Shortly, digital currencies could reshape global financial systems, with the digital euro expected by November 2025. Meanwhile, the Hungarian Central Bank (MNB) is exploring the potential of a digital forint for wide-scale use, currently in a test phase for youth aged 8–14 since March of last year.

Digital forint in testing phase

The “Student Safe” (Diákszéf) mobile app, available nationwide since May last year, allows young people to manage digital forint transactions within the app, explained Anikó Szombati, head of MNB’s digital and fintech development, during the “Digital Hungary” event hosted by the Oeconomus Economic Research Foundation, Index reports. The MNB began researching digital central bank currencies around 2020 and published a study on the topic in 2021.

digital currency money forint euro
The MNB is exploring the potential of a digital forint for wide-scale use. Photo: depositphotos.com

While many central banks are examining digital currencies, most do so at a theoretical level. The MNB, however, has opted to practically test a local digital currency, with a focus on educating young users about responsible money management and digital payments. The goal is to develop a user-friendly and competitive app for digital currency transactions, potentially rivalling both traditional banks and major fintech players like Revolut.

Why digital currencies?

Central banks generally consider digital currencies for two primary reasons:

  1. Market gaps – to address banking and fintech access issues in countries with limited financial services.
  2. Strategic sovereignty – in the eurozone, for instance, the digital euro would help secure monetary independence from foreign digital currencies and major card companies, like Visa and Mastercard, which currently hold near-monopoly status in Europe.

A digital currency could also serve as a free payment tool for those in need. MNB’s digital currency rollout could make account services and transactions more affordable for households and businesses alike.

Digital currency a way to restore state control

Economist Zoltán Pogátsa noted that a central bank digital currency is not just a technological advancement but a way to restore state control over the currency. “Having a central bank digital currency essentially reclaims control over money for the state,” he remarked, explaining that most money in circulation today is issued through commercial bank lending, beyond effective state oversight.

The rise of “super apps” is also anticipated. According to György Mudri, CEO of FintechX Technologies, these apps will manage people’s lives beyond just banking, allowing financial transactions through integrated platforms.

Experts agreed that while cash usage will likely decline gradually, its complete disappearance is not yet feasible, nor is it an immediate goal for the central bank. Currently, 60% of transactions in Hungary are still cash-based, according to Zsolt Selmeczi, CEO of GIRO Plc. However, Pogátsa believes a cashless society should be encouraged, suggesting that in 30–40 years, the idea of carrying coins for payment will seem quaint.

By 2030, the MNB aims to reduce the proportion of cash transactions in Hungary to below 30%.

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National Bank of Hungary marks 75 years of Hungarian-Chinese relations with commemorative coin and book

The National Bank of Hungary (NBH) commemorated the 75th anniversary of the establishment of diplomatic relations between Hungary and the People’s Republic of China by presenting a coin set issued by the bank for the occasion and a book titled The 75th Anniversary of Hungarian-Chinese Financial Relations, the NBH said on Tuesday.

Central bank governor György Matolcsy praised the continuous development of Hungarian-Chinese financial relations, the NBH said. Amid geopolitical challenges, key states such as Hungary are becoming more and more important and can offer a platform for cooperation between West and East, he added.

Ambassador Gong Tao thanked the NBH and Matolcsy for promoting bilateral relations. In the past 75 years, Hungary and China have worked actively to elevate relations to an unprecedented level, the statement said.

Photos:

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National Bank of Hungary: Maintaining banks’ strong capital position ‘pivotal

The National Bank of Hungary (NBH) acknowledged a reduction in overheating risks, in spite of the gradual lending recovery, but said maintaining banks’ strong capital position was “pivotal” amid still high geopolitical and macroeconomic uncertainty in a report published on Monday.

National Bank of Hungary shows a reduction in overheating risks

In its fresh Macroprudential Report, the central bank and financial market watchdog said indicators assessed to determine the Countercyclical Capital Buffer rate pointed to a reduction in the risks associated with overheating, but insisted on the need for a build-up of releasable capital buffers in a timely manner.

The NBH noted that the Countercyclical Capital Buffer rate would rise from 0.5pc to 1pc from July 1, 2025, even in a neutral risk environment. It added that the strong capital position and “outstanding profitability” of banks would mute any negative impact on the lending capacity of the banking system.

Lenders continue to comply with macroprudential financing rules with appropriate capital buffers and a favourable funding structure, the NBH said. The ratio of short-term debt on the banking sector’s balance sheet remains low, it added.

 

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Hungary’s commercial real estate market poised for slow recovery, says central bank report

Hungary’s commercial real estate market may have “bottomed out” and could be ahead of a “slow turnaround”, the National Bank of Hungary (NBH) said in a report on the sector published Thursday.

Tamás Nagy, a director at the NBH, said disappointing GDP had weighed on the sector but accelerated, broad-based growth could mitigate cyclical and structural risks. He acknowledged higher vacancy rates on the office and industrial-logistics property market, boosted by handovers amid modest demand, but said the NBH saw little risk if the vacancy rate continued to climb in the mid-term.

commercial real estate budapest
Hungary’s commercial real estate market may have “bottomed out” and could be ahead of a “slow turnaround”. Photo: depositphotos.com

He said a record volume of projects in the pipeline would lift industrial-logistics property stock significantly in the coming two and a half years. Commercial property market investment in Hungary fell in H1 2024, but yields stagnated, he added. Outlays of commercial property loans climbed in the first half, even though lending conditions did not ease, he said. Improving consumer confidence has improved vacancy rates at shopping centres in the capital and other cities around the country, he added.

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Featured image: depositphotos.com

Survey assesses Hungarians’ financial health, and the results are far from encouraging

The National Bank of Hungary revealed the results of its inaugural survey on Hungarians’ financial health on Thursday.

The survey, which defined financial health as a feeling of financial security as well as the freedom to make one’s own financial decisions in the present and in planning for the future, was conducted among a representative sample of 1,500 people between the ages of 18 and 79 in August. Based on the results, the NHB rated Hungarians’ financial health on a scale of 0 to 100.

On average, Hungarians scored 53 on the NBH’s Financial Health Index, but 14pc were in the “critical” range, between 0 and 29, and 29pc were “vulnerable”, scoring between 30 and 49. The NBH noted that more than half of the households in those at-risk categories had net incomes under HUF 400,000/month. Around 35pc of Hungarians were in the “low-risk” category, scoring 50-69. Among the Financial Health Index sub-indices, Hungarians scored 48 for “ability and effort to make savings”, 56 on the gauge of material position and 49 for “financial resilience”.

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Hungarian national bank’s latest decision strengthens the forint

The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base unchanged at 6.50pc at a monthly policy meeting on Tuesday.

At the previous policy meeting, in September, the Council had cut the rate by 25bp. 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 domestic inflation outlook was consistent with the projection in the NBH’s latest quarterly Inflation Report, published in September, but pointed to an increase in upside risks to inflation on the back of deteriorating international investor sentiment and volatile commodity prices.

“Re-intensifying geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warrant a pause in cutting interest rates,” the policy makers said. “The external interest rate environment may ease more slowly than previously expected, while the expected interest rate paths of the world’s leading central banks are still surrounded by uncertainty,” they added. Looking ahead, the Council said a “careful and patient approach” to monetary policy was still warranted and decisions on the base rate would be taken in a “cautious and data-driven manner”.

Forint strengthens after the decision

The decision of the Monetary Council did not come as a surprise: after the words of Barnabás Virág, Vice President in charge of Monetary Policy, it was certain that interest rates would be kept on hold, Portfolio writes. Nevertheless, the forint reacted to the announcement by strengthening to around 400/EUR.

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Hungarian branch of Revolut opening postponed, MNB worried

Hungarian clients of fintech company Revolut “deserve a domestic bank”, the National Bank of Hungary (NBH) said on Thursday.

The central bank and financial market regulator pointed to foot-dragging on the launch of a local Revolut branch, but said a branch still wouldn’t be covered by the National Deposit Insurance Fund (OBA).

“A reassuring solution would be for the company to operate with a Hungarian subsidiary…sufficiently capitalised and with a deposit guarantee from OBA,” it said.

The NBH noted that around 1.5m Hungarians had accounts with Revolut — registered as a bank in Lithuania — and that number was set to reach 2m next year.

REvolut in Hungary
Photo: FB/Revolut

 

Read also:

  • Good news for customers: Revolut elevates its presence in Hungary

Featured image: depositphotos.com

Good news from the Hungarian economy: National Bank prepared to protect the Forint, inflation likely to fall – UPDATED

Hungarian forint

When the Hungarian forint began losing value in 2022, the Hungarian National Bank (MNB) intervened by significantly raising the base interest rate to protect the national currency. Since then, the Bank has been gradually lowering the base rate to help revive the economy’s struggling engine. However, global developments may once again necessitate action to defend the forint, and it appears the Bank is ready to do so.

Hungarian National Bank poised to defend the Forint

According to portfolio.hu, the Hungarian National Bank may adopt a more cautious approach to its next base rate decision, expected in October. This caution is partly due to global uncertainties, such as the upcoming US presidential election and ongoing geopolitical conflicts.

Barnabás Virág, a Deputy Governor of the Hungarian National Bank, elaborated on this during a presentation for investors. He explained that the Bank’s capacity for manoeuvre with regard to lowering the base rate in October is becoming more limited. Key factors influencing the Bank’s decision include inflation in Hungary, regional economic performance, and the global risk environment.

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

The situation in the Middle East has escalated, China has unveiled measures to stimulate its economy, and the United States has reported stronger-than-expected economic data. These factors have increased the risk of higher inflation, while geopolitical uncertainties have already driven the forint above the 400/EUR level. As a result, the Bank’s more cautious stance is understandable.

Hungarian government aims for economic growth

As Hungary moves into the campaign period for the 2026 general election, government officials, including Prime Minister Viktor Orbán, have been emphasising the need for economic growth, rising wages, and increased investment. This would require an injection of capital into the economy. However, despite foreign investment, domestic consumption has not risen as the government had anticipated.

forint money currency Hungarian wages minimum wage
Source: depositphotos.com

Due to the high base interest rate, many Hungarians have opted to keep their savings in banks or even abroad. While the government would like to reduce interest rates to stimulate consumption and boost growth, lowering rates too far could make the forint even more volatile. With numerous global and regional uncertainties at play, the exchange rate could easily rise, leading to soaring inflation—a vicious cycle that would be difficult to break.

Inflation may fall this autumn and winter

Analysts consulted by portfolio.hu believe that inflation continued to decline in September, with the median inflation rate likely to be around 3%. Fresh data on the subject is expected to be released tomorrow. If these predictions are correct, it would mark the first time in 3.5 years that inflation in Hungary has fallen below 3%. The last time inflation was below this level was in January 2021, indicating that Hungary’s inflationary pressures began to mount well before the war in Ukraine.

In December, analysts expect the Hungarian Central Statistical Office (KSH) to report a year-on-year inflation rate of 4.5%, lower than the previously forecast 5%. However, portfolio.hu noted that inflation in December 2025 may end up higher than currently expected. For 2024, yearly inflation is projected to be around 3.8%.

UPDATE: Policy makers acknowledged factors allowing ‘careful’ rate reduction at September meeting

National Bank of Hungary (NBH) rate-setters agreed that continuing disinflation, a looser external monetary policy environment, the country’s improved risk perception, and a gradual improvement in confidence among economic players allowed a “careful” reduction in the base rate at a policy meeting in September, but still argued “in general” for maintaining a restrictive policy stance, the minutes from the meeting released on Wednesday show. The NBH’s Monetary Council voted unanimously at the meeting on September 24 to cut the base rate by 25bp to 6.50pc, after weighing an option to keep the base rate on hold, too.

“The Council considered these options primarily based on the outlook for inflation, economic agents’ precaution and changes in the external monetary policy and risk environment,” reaching a consensus that disinflation was expected to continue over the monetary policy horizon, while pointing to a “somewhat looser” external monetary policy environment, a “slight” improvement in the country’s risk perception and the gradual recovery of confidence among economic agents, according to the minutes. “In the Council’s assessment, all these factors allowed a careful reduction in interest rates. However, members in general argued for maintaining a restrictive monetary policy stance and preserving financial market stability,” the minutes show.

Read also:

  • Hungarian central bank launches new 200-forint coin alongside commemorative coins – PHOTOS and more in THIS article
  • Experts worried that PM Orbán’s brutal wage rise would bring inflation and a HUF 500/EUR exchange rate

Revolut’s Hungarian expansion: Hiring in progress for local branch

revolut fintech company hungarian branch

Revolut, one of the world’s fastest-growing fintech companies, is taking concrete steps towards establishing a branch in Hungary. With over 1.5 million users already in the country, the company is now actively seeking professionals to build its local workforce, signalling a strong commitment to expanding its presence in the Hungarian market.

The expansion is official

revolut fintech company hungarian branch
Photo: depositphotos.com

For some time, Revolut has been delivering its services to Hungarian users from abroad. However, that is about to change as the company is now in the process of setting up a local office. The news was initially hinted at by Antoine Le Nel, Revolut’s Growth and Marketing Director, back in August 2023, and the company’s plans have now progressed further. According to a report by Revb.hu, the fintech company is currently recruiting staff for key roles in its future Hungarian branch. Positions like Legal Counsel and Regulatory Compliance Manager are being advertised on LinkedIn, and the company is on the lookout for skilled experts with significant experience in these fields.

Balázs Györffy, Revolut’s Manager of Expansion, also confirmed these developments on social media, stating that the company is working at full speed to establish its branch in Hungary. This move is part of the company’s broader global expansion, which includes efforts to enter other key markets, such as India.

Why a branch, not a subsidiary?

Revolut has clarified that they are opening a branch in Hungary, not a subsidiary. This strategic choice means that the company will not apply for a Hungarian banking license. Instead, the services provided to Hungarian customers will continue to operate under Revolut’s Lithuanian banking license. As a result, customer deposits will still be insured through Lithuania’s deposit protection scheme.

That said, opening a local branch will bring specific advantages for Hungarian users. For instance, Revolut plans to offer Hungarian IBAN numbers, simplifying salary transfers and local transactions. This could also enhance access to immediate domestic transfers, something currently limited by the international nature of Revolut’s operations. Additionally, the company will be providing Hungarian-speaking customer service, replacing the existing international support team.

Navigating regulatory challenges

revolut card payment
Photo: depositphotos.com

In the past, the Hungarian National Bank had encouraged Revolut to establish a subsidiary, which would have allowed the company to join Hungary’s National Deposit Insurance Fund. However, the fintech company chose not to pursue this option, citing it as a strategic decision. Tamás Léder, Revolut’s Hungarian country manager, explained that while the company decided against becoming a subsidiary, they are fully committed to growing their operations in the country.

The company has been handling the Hungarian government’s evolving tax and fee structure, including the recent introduction of transaction taxes on currency exchanges. Since October 2024, conversions have been subject to a higher levy. Despite these regulatory changes, Revolut has continued to absorb these costs rather than passing them onto customers, though this may not be sustainable in the long term.

What does this mean for customers?

The establishment of a local branch is a significant step forward for Revolut’s users in Hungary. In addition to Hungarian IBAN numbers, customers will benefit from faster and more efficient transactions, especially when dealing with local banks. This will particularly help the many Hungarians who already use Revolut to receive their salaries. The current process, which involves transferring funds to a Lithuanian account, can result in delays and additional fees. Hungarian IBAN numbers will solve these issues, making Revolut a more viable option as a primary bank account for many users.

Furthermore, the new branch will provide local customer support, improving the user experience and offering more direct solutions for handling complaints and queries. This level of localised service is expected to increase the company’s popularity and user base in Hungary, which it aims to grow to 2 million by 2025.

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Featured image: depositphotos.com

Hungarian central bank launches new 200-forint coin alongside commemorative coins – PHOTOS

New forint coin will appear in Hungary

The National Bank of Hungary (Magyar Nemzeti Bank, MNB) has announced the release of new commemorative coins, including a redesigned version of the circulating 200-forint coin. Two other commemorative coins with face values of HUF 30,000 (EUR 75) and HUF 7,500 (EUR 19) will also be introduced, each honouring the martyrs of Arad.

Commemorative coins honouring the martyrs of Arad

On 6 October, which marks the memorial day of the martyrs of Arad, the MNB will issue a large, 30,000-forint silver coin with a 13-sided inner rim, along with a 7,500-forint version made from non-ferrous metals, Világgazdaság reports. These coins are being released to commemorate the 175th anniversary of the execution of the martyrs who sacrificed their lives for Hungarian independence.

In addition to the commemorative coins, a special edition of the 200-forint coin will also be issued in honour of Lajos Batthyány, Hungary’s first constitutional prime minister. One million copies of this unique 200-forint coin will be put into circulation, while the silver commemorative coins will be produced in a limited run of 6,000 pieces, and the non-ferrous metal versions in 8,000 pieces. The commemorative designs were created by coin artist István Kósa, while sculptor Zoltán Kovács crafted the redesigned side of the 200-forint coin.

175 years ago, on 6 October 1849, 13 Hungarian military officers were executed in Arad due to their role in the 1848-1849 War of Independence. In remembrance of the 175th anniversary of their execution, as well as that of Lajos Batthyány, MNB will issue a commemorative edition of the 200-forint coin, a large, 30,000-forint silver coin with a 13-sided inner rim, and a 7,500-forint non-ferrous variant will also be introduced on this national day of mourning.

200-forint coins to look different

The commemorative version of the 200-forint coin will retain the same face side as the current coin in circulation, but instead of the familiar Chain Bridge design, the reverse will feature a portrait of Count Lajos Batthyány (see above). This image, based on Miklós Barabás’ famous oil painting, extends to the coin’s edge. Below the portrait, you’ll find the year of minting, “2024”, on the left side, with “BATTHYÁNY” inscribed above, and “MAGYARORSZÁG” on the right.

One million copies of the commemorative 200-forint coin will be minted.

“Lajos Batthyány and the 13 Martyrs of Arad” commemorative coin

To honour the significance of this anniversary, the MNB will also release commemorative coins named “Lajos Batthyány and the 13 Martyrs of Arad” with face values of 30,000 forints in silver and 7,500 forints in non-ferrous. These coins are intended to serve as a tribute to the martyrs who fought for Hungary’s independence and self-determination. They will not be put into circulation. The designs of the silver and non-ferrous versions are identical, differing only in face value.

Both sides of the “Lajos Batthyány and the 13 Martyrs of Arad” coins feature a 13-sided inner rim, symbolising the reason for their release. The obverse side displays a half-length portrait of Lajos Batthyány, based on Miklós Barabás’ painting. To the left is the inscription “MAGYARORSZÁG” (Hungary), while on the right, in three lines, are the face values “30000” and “7500”, the word “FORINT”, and the mint mark “BP.” Below the portrait is Batthyány’s signature, inscribed vertically.

On the reverse side, a stylised representation of a kopjafa (a Hungarian memorial column) appears on the left, with the date “1849” inscribed at the top to mark the year of the martyrs’ execution (see above). Below this are the names of the 13 martyrs, listed in two columns, and at the bottom, the minting year “2024”. To the right, a part of the Arad Liberty Statue, created by sculptor György Zala, is depicted. At the top right of the reverse is the inscription “ARADI VÉRTANÚK” (Martyrs of Arad), and the designer’s signature, István Kósa, appears at the bottom.

As with previous releases, these coins will be produced in limited quantities: 6,000 silver coins and 8,000 non-ferrous coins.

To ensure the wide distribution and appreciation of these commemorative pieces, the 30,000-forint silver coin will be available for its face value for three months following its release, while the non-ferrous version will be available for one year, starting on 7 October 2024. The coins can be purchased at the Hungarian Mint’s shop (7 Báthory Street, District V., Budapest) or through their online store.

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Experts worried that PM Orbán’s brutal wage rise will bring inflation and a HUF 500/EUR exchange rate

PM Orbán talked about a shockingly quick wage rise in Hungary between 2025 and 2028 in his latest interview in the Kossuth Rádió. He said the average Hungarian wage should reach HUF 1 million, the minimum wage should be EUR 1,000, and the minimum wage would equal 50% of the average income. The maths only makes sense if the forint-euro currency exchange rate worsens significantly.

450-500 EUR/HUF exchange rate may come by 2027-2028

Officials of the Hungarian government and PM Viktor Orbán talked about the significance of salary rise in Hungary. That is not surprising: in spring 2026, there will be general elections in Hungary, and Orbán has a challenger, Péter Magyar, whose support is steeply increasing.

Orbán and his government determined three numbers in that regard. They said the average wage should be HUF 1 million (EUR 2,500), the minimum wage should be EUR 1,000, and the minimum wage should be 50% of the average salary. The calculation’s result is HUF 450/EUR, which is astonishing considering the public outrage that followed the end-2022 forint historic forint fall when the Hungarian currency reached 426/EUR. Thanks to the Hungarian National Bank’s intervention and the sky-high base interest rate they introduced, the forint stabilised at the 390/EUR level.

huf forint money hungary's economy wage
More paper money with less value? Source: Pixabay

If we bring the regular average wage in Hungary into the calculation, which, experience shows, is 10% below the average salary (HUF 900,000), the currency exchange rate increases to 500/EUR.

Before, the Hungarian government talked about a HUF 375,000 (EUR 933) gross minimum wage as their target until 2027. However, Orbán’s wage rise means the minimum wage should increase by 50% in the next three years. That would be a 16% annual rise concerning the average wage and 14.5% in the case of the minimum wage, provided the euro exchange rate remains at HUF 400/EUR.

Experts worried that the wage rise would bring inflation and forint fall

Only a powerful Hungarian economy could generate such an increase in the well-being of the Hungarians. However, the Hungarian economy is struggling. We wrote about the falling industrial output and a possible recession HERE.

The other option is skyrocketing inflation, which would burn the “extra money” of the Hungarian households, just like it did between 2022 and 2024.

Since Orbán wants outstanding economic growth (3-6%) in the next few years, the Hungarian National Bank will not be able to stop the fall of the forint with a high base interest rate.

As a result, both Portfolio and G7 suggest the government’s aims are not coherent. If they want robust economic and wage growth, they will need to sacrifice the forint and create inflation. Another consequence can be that many small and medium companies will cease operation because of the wage-price spiral.

What’s more, Bank of America analysts wrote that the forint is significantly overvalued, and a HUF 430/EUR currency exchange rate was realistic. They added that the Hungarian economy’s productivity stagnated, and the difference between the interest rates of Hungary and the EU decreased.

National Federation of Workers’ Councils agrees with govt targets

The National Federation of Workers’ Councils agrees that the minimum wage needs to be increased to the equivalent of 1,000 euros and the average wage from the current amount, some 600,000 forints (EUR 1,500) to 1 million forints, and that this would be possible within 2-3 years, the organisation said on Friday in response to an announcement by the prime minister earlier in the day.

PM Orbán told public radio on Friday morning that a cabinet meeting earlier this week discussed ways to achieve the 1,000 euro minimum wage and the increase of the average wage to 1 million forints. Orban said the plans could be fulfilled if they managed to agree with employers and employees.

The National Federation of Workers’ Councils said it would offer all the professional help needed for the plan’s success. It is important that social partners including workers’ interest representation bodies and trade union alliances are involved in the process to achieve a more active coordination of interests, and it could result in a reform of regulations on minimum wages, it added.

Read also:

  • Hungarian forint doing something unprecedented: further slip expected – read more HERE
  • Morgan Stanley predicts euro could reach 410 forints amid worsening economic outlook

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Apple charges Hungarian users again without warning as payment issue resurfaces

According to a statement from the Hungarian National Bank (MNB), new reports have surfaced about recurring payment issues related to Apple. Some users have experienced multiple deductions from their bank accounts, with one case involving 13 separate charges.

Back in June, a major scandal broke out involving Apple mistakenly withdrawing funds from Hungarian users’ bank accounts, likely due to an error in the Hungarian App Store. One Index reader reported that HUF 550,000 (EUR 1,370) was deducted in 74 transactions over just five minutes, after which their bank blocked their card. These issues generally involved charges related to old Apple subscriptions or purchases made through Apple Pay, which were mistakenly processed again.

Apple mistakenly withdraws funds again

apple mistakenly withdraws funds
Photo: depositphotos.com

Apple was informed about the problem but delayed sending the list of affected transactions to the card companies. Until then, it was unclear whether Apple or the banks would be responsible for cancelling the erroneous charges and refunding the users. The card companies eventually forwarded the data to the banks, which began the process of returning the funds.

The Hungarian National Bank monitored the situation closely, urging local financial institutions to compensate affected users as quickly as possible. By the first week of July, the majority of victims had their funds returned, with the total sum reaching an estimated HUF 2 billion (roughly EUR 5 million). This incident also drew more attention to cybersecurity threats and how they are handled. However, it seems another Apple-related issue is emerging, as the company has once again started charging users without notice.

A reader of Index reported noticing numerous unauthorised transactions overnight: “I was charged 13 times, starting at 1:37 AM, with deductions happening every 1-2 minutes. I contacted Apple’s Hungarian support this [Tuesday] morning, but they were only made aware of the problem today. They couldn’t provide any information and just told me to check back in a day or two,” the reader said.

In response, the Hungarian National Bank issued a statement, saying both the MNB and the Hungarian Banking Association are taking steps to safeguard customers and ensure the stability of financial markets. As soon as the Hungarian National Bank was informed of the recurring payment problems with Apple, it immediately contacted payment service providers and initiated measures to protect customers.

The MNB is working closely with the Hungarian Banking Association to resolve the issue, the statement said. They also noted that, as a result of the previous incident in June, banks are now better prepared for these kinds of situations and responded promptly. According to early, unconfirmed data, fewer users have been affected this time. The MNB assured the public that they would continue to provide updates on the matter.

Foreign users are affected too

The Hungarian Banking Association also issued a statement, highlighting that on the night of 30 September, a technical error in the Apple Store caused the duplication of pending charges that had not yet been processed. In some cases, Apple initiated double billing for subscription fees.

This technical issue has impacted cardholders in about 20 countries.

Hungarian users affected by this may temporarily see duplicate charges for ongoing subscriptions that have not yet been settled, but the actual payment has not been processed twice.

The statement further explained that Hungarian banks, drawing on their experience from the summer incident, are working closely with the MNB to monitor the transactions and ensure that no double charges are made on users’ accounts. Users are advised to check their account statements in a few days to verify that the correct amount was charged according to their contracts. If any discrepancies are found, they should contact their bank’s customer service immediately.

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