Hungary should aim to introduce the euro at an exchange rate between 360 and 380 forints to the euro if it wants to avoid damaging the economy, according to prominent Hungarian investment analyst Viktor Zsiday.
In a recent analysis cited by HVG, Zsiday examined what exchange rate would strike the right balance between maintaining low inflation and protecting Hungary’s export-driven economy. The debate has gained renewed attention after the opposition-led Tisza Party stated that its long-term goal would be to create the conditions necessary for Hungary to adopt the euro by 2030.
Strong forint versus export competitiveness
According to Zsiday, Hungary faces a difficult economic dilemma if it seriously considers joining the eurozone.
A stronger forint would help reduce inflation and benefit households with savings in Hungarian currency. However, exporters — a crucial pillar of the Hungarian economy — have long benefited from a weaker forint, since companies earning revenue in euros receive more forints when the exchange rate is higher.
Once a country adopts the euro, currency devaluation is no longer possible, meaning any future competitiveness problems would have to be addressed through internal economic adjustments, which Zsiday warned could be painful.
Comparing Budapest with regional capitals
To estimate a realistic “equilibrium” exchange rate, Zsiday used data from Numbeo, one of the world’s largest cost-of-living databases.
He compared average consumer prices in Budapest with those in several neighbouring post-socialist capitals of similar economic development, including:
- Bucharest
- Zagreb
- Ljubljana
- Bratislava
- Warsaw
- Prague
- Sofia
Using the assumption that countries with broadly similar economic conditions should have comparable price levels, Zsiday calculated what euro-forint exchange rates would produce similar basket prices across the region.
His first calculations produced implied exchange rates ranging from around 336 to 439 forints per euro. Excluding Romania — which he considered an outlier due to significantly higher implied euro pricing — the average equilibrium rate came out at roughly 359 HUF/EUR.
PPP-adjusted calculations point to 380–390
Zsiday then adjusted the figures using purchasing power parity (PPP)-based GDP per capita data from Eurostat, taking into account the fact that more developed countries generally have higher price levels.
After this adjustment, the estimated equilibrium exchange rates shifted higher:
- Romania: 450
- Croatia: 371
- Slovenia: 407
- Slovakia: 341
- Poland: 394
- Czechia: 409
- Bulgaria: 357
The average came out at approximately 390, or around 380 when Romania was excluded.
Based on both sets of calculations, Zsiday concluded that an entry exchange rate between 360 and 380 forints per euro would likely represent the best compromise for Hungary.
EU funds and speculation could strengthen the forint
The analyst also argued that several factors could place upward pressure on the Hungarian currency in the coming years.
These include the potential arrival of large volumes of EU funding, renewed investor confidence and Hungary becoming an attractive target for speculative capital inflows. In addition, Hungarian households accumulated significant euro savings during recent years of forint weakness, some of which could be converted back into forints if economic conditions stabilise.
According to Zsiday, these forces could trigger excessive forint appreciation unless the central bank responds with interest rate cuts — assuming inflation trends allow room for monetary easing.
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Lower interest rates could ease pressure on the economy
Zsiday suggested that faster rate cuts could have multiple benefits beyond currency management. Lower borrowing costs would reduce the state’s financing burden and could eventually allow the government to phase out interest rate caps and subsidised loan schemes, as market lending rates would become more affordable on their own.
He added that, under ideal circumstances, even a 4% base interest rate within a year might not be unrealistic — though he stressed that this would require the release of EU funds and a credible 2027 Hungarian budget plan.
Euro debate likely to intensify in Hungary
Although Hungary currently has no official target date for euro adoption, discussions surrounding the common currency appear to be intensifying as economic pressures, inflation concerns and long-term competitiveness remain key political issues.
Zsiday’s calculations highlight just how politically and economically sensitive the choice of conversion rate could become if Hungary eventually moves closer to joining the eurozone.
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