UBS: Forint to Strengthen to 355-360 on Tisza Win

UBS Forecasts Forint Appreciation

UBS projects the Hungarian forint will strengthen to a 355-360 range against the euro in the coming months. This forecast follows the opposition Tisza party's decisive election victory, which secured a constitutional majority and is expected to facilitate a smooth political transition.

Election Impact and EU Funds

According to a UBS research note, the market's focus has now shifted to the new government's policies, particularly the speed of legislation aimed at unlocking crucial EU funds. The bank estimates that securing these funds, valued at 2.5% of GDP for both 2026 and 2027, would more than offset the impact of higher energy prices.

Market Projections and Scenarios

The EUR/HUF pair currently trades around 365. UBS notes that a roughly 10% appreciation of the forint’s real effective exchange rate is plausible. A more aggressive move to 340 by year-end would require significant capital inflows, potentially driven by accelerated euro adoption plans or a surge in foreign direct investment.

Summary and Outlook

In summary, the election outcome is viewed as a positive catalyst for the Hungarian forint. The key factor to watch will be the new government's ability to implement reforms and secure EU funding, which will determine the currency's trajectory in the medium term. UBS continues to prefer the forint over the Polish zloty.

FAQ

Q: What is UBS's new forecast for the EUR/HUF rate?
A: UBS expects the EUR/HUF to strengthen to a range of 355-360 in the coming months.

Q: Why is the Tisza party's victory significant for the forint?
A: Their constitutional majority is expected to speed up reforms needed to unlock EU funds, which would provide significant support for the currency.

Source: Investing.com