Hungarian Forint: Rally against Euro reassessed after rate cuts – Societe Generale
Zusammenfassung:Societe Generale strategists analyzed the Hungarian forint after the Magyar Nemzeti Bank cut its policy rate by 25 basis points to 5.75% as expected and signaled further easing, with a reassessment scheduled in September. The bank sees scope for a terminal rate of 5.0% by year-end, noting that inflation is comfortably below target and the forint has remained resilient. However, they question whether the forint‘s rally against the euro has already peaked, with EUR/HUF bottoming near 348.59 in mid-June. While much of the optimism over a euro-friendly government is priced in, along with the rate cuts, they still forecast EUR/HUF ending 2026 around 355. Key risks include elevated oil prices and Hungary’s 2027 budget, to be presented by Peter Magyars government in October.
Societe Generale strategists analyze the Hungarian Forint (HUF) after the central bank of Hungary, Magyar Nemzeti Bank (MNB) cut its policy rate to 5.75% and signalled more easing. They expect a 5.0% terminal rate by year-end, noting EUR/HUF already bottomed near 348.59. With inflation below target and a resilient Forint, they still see EUR/HUF ending 2026 around 355, while highlighting risks from Oil and Hungarys 2027 budget.
Forint outlook after MNB easing
“In CEEMEA, the MNB yesterday lowered the policy rate by 25bp to 5.75% as expected and signalled scope for further easing ahead. A reassessment of the policy level and macro outlook is scheduled in September.”
“With inflation comfortably below target and the forint resilient, we see scope for a decline to 5.0% terminal rate by year-end.”
“That said, the question for HUF bulls is have we already seen the best of forint rally in 1H with EUR/HUF bottoming out 348.59 in mid-June.”
“While much of the optimism of Euro-friendly government is priced in by the forint assets the rate cuts too are fully priced and EUR/HUF could still end the year around 355 but for that risks are in the form of elevated oil and the 2027 budget by Peter Magyars government due in October.”
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