Commerzbank’s Tatha Ghose notes that the Hungarian Forint (HUF) has only partially retraced its post-election gains and is expected to recover if global risk conditions stabilise, with EUR/HUF seen returning towards 350–355 in coming months. However, Ghose warns that slower growth, ongoing central bank easing and fiscal concerns could reassert pressure on the Forint into 2027, as real interest rate support erodes.
Near-term recovery, longer-term headwinds
“The forint rally has corrected over the past month, but this correction should not be overhyped. The currency always was the highest-beta risk play in CEE, and therefore suffered disproportionately during the recent global risk-off episode. The combination of energy shock, geo-political risk and drought raises stagflation fears – weaker growth prospects, but higher inflation risk – which tends to hurt the forint more than the zloty or the koruna.”
“In this sense, the recent move was less a reassessment of Hungary’s political story, and more a partial unwinding of a strong prior rally. We would not be surprised to see EUR/HUF gravitate back towards the 350-355 area if geopolitical and energy-market conditions were to stabilise.”
“In conclusion, the near-term forint correction should not be over-emphasised. The regime-change story has not disappointed, Tisza’s ratings remain strong, and Magyar is moving ahead with reforms on multiple fronts. If the global risk backdrop stabilises, the forint can recover part of its recent losses, and EUR/HUF can move back towards the 350-355 area.”
“Later, however, the familiar constraints will return. Engineering faster GDP growth, enacting meaningful reforms and implementing tighter fiscal policy will all involve significant challenges and trade-offs. The issue of slow trend growth in Hungary will be hard to address.”
“At the same time, Hungary’s real interest rate is likely to narrow as MNB cuts rates and as underlying inflation momentum stops improving. Weak growth and a narrowing real interest rate will pressure the exchange rate later during 2027.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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