The forint is considered attractive abroad, but there are risks for the future

By: Trademagazin Date: 2025. 09. 19. 10:31

🎧 Hallgasd a cikket: Nyelv: Sebesség: 1.05×

The forint is leading the regional competition: it has strengthened by more than 5 percent against the euro this year at current exchange rates. The Polish zloty is essentially stagnant, while the Czech crown has an advantage of less than 4 percent. Evaluating the forint’s performance this year, Dávid Németh, the chief analyst at K&H, said that one of the main reasons for the strengthening is the forint’s interest rate advantage, which has increased after both the Polish and Czech central banks reduced their base rates this year. In addition, the Fed, which acts as the US central bank, also lowered its interest rate this week.

In addition, a good mood and risk-seeking have characterized international markets for months, so investors consider the forint and Hungarian government securities, which have been in very high demand in recent days, to be attractive targets. “The expert also said that it is not yet known when the Hungarian National Bank (MNB) will cut interest rates. We do not expect any changes at the interest rate decision meeting next Tuesday. In addition, the chance of an interest rate cut this year is small, but not completely ruled out. “Hungarian central bankers will most likely wait for the fall assessments of the credit rating agencies, and then make their further steps dependent on their results and the development of international sentiment,” he added.

It is easy to imagine that the forint will weaken slightly before the assessments, as investors may try to avoid the risk of a possible negative rating. Of the major credit rating agencies, S&P’s move may be the most significant, since Hungary’s rating is just above the junk category, i.e. not recommended for investment. In addition, the development of the forint may also be influenced by the international investor environment and the government’s budgetary policy.

According to Dávid Németh, based on the current outlook, the forint appreciation momentum seen in recent months may subside, and in the coming weeks the euro may fluctuate between 385 and 395 forints.