Orbán loses power after 16 years
The defeat of Viktor Orbán in the Hungarian elections dominated newspaper headlines worldwide, also strengthening the national currency, the Hungarian forint.
Péter Magyar, the former Prime Minister of Hungary, is announcing a series of changes in a policy that until now had been supported by both Donald Trump and Vladimir Putin.
According to Bloomberg, the opposition’s victory will likely unlock billions of euros from EU funds that have been frozen by Brussels due to rule‑of‑law breaches by Orbán’s administration.
"Although it is difficult to gauge market sentiment after the escalation of the conflict between the United States and Iran, the return of the EUR/HUF rate last week to pre‑conflict levels suggests that the market priced the opposition’s victory largely as a normal event," analysts at ING Think said.
"From a market perspective, the majority of the constitution allows for a smooth handover of power to the opposition and a quicker path to unlocking EU funds, which are the main focus of investors, giving Hungarian assets another reason to extend the boom", they added.
As the bank claims, the lack of a breakthrough in negotiations between the United States and Iran complicates a situation that could lead to risk avoidance in markets and pressure on the entire Central and Eastern European region.
"If we assume that the situation will calm down somewhat, we expect the EUR/HUF rate to stabilize at around 355–360", the statement reads, noting the expected improvement in GDP prospects from the anticipated inflow of EU funds and adoption of the euro promised by the opposition.
The report indicates that the National Bank of Hungary will not decide to cut interest rates in the coming months, even though "the currency rate shows better performance than the currencies of other Central and Eastern European countries".
"However, another unknown and a factor increasing volatility in the coming days will be the profit‑taking moment. Given the significant uncertainty in the world in recent days, investors are expected to want to realize gains earlier than usual, which will likely lead to greater volatility", the summary concluded.
See also: Viktor Orbán lost power after 16 years. Zbigniew Ziobro will feel the Hungarian elections
Hungarian forint rate after the Hungarian elections
The euro to Hungarian forint rate fell by 1,82% to 366,44 HUF, the lowest level since the beginning of 2022.
Chart. Euro to Hungarian forint rate (EUR/HUF)
Source: TradingView.
The dollar to Hungarian forint rate reaches 313,59 HUF after falling by 1,91%.
Chart. Dollar to Hungarian forint rate (USD/HUF)
Source: TradingView.
See also: Dollar rate in the shadow of the Middle East conflict. Expert: "Hard to compromise"
