At the Hungarian National Bank's (MNB’s) FX swap tender providing euro liquidity, the central bank of Hungary has reduced the maximum allowable swappoints, effectively lowering the annualised forint yield by around 50bp to 5.25%, MBH Bank said in a note on May 13, according to financial website Portfolio.hu. Following the announcement, the EUR/HUF rose 1% from 354, its strongest level in four years.

The decision pushed FX swap market rates further away from the central bank’s 6.25% base rate, raising questions about the effectiveness of monetary transmission and reinforcing concerns that current market conditions are increasingly shaped by abundant liquidity and strong currency demand.

MBH analyst Zoltán Árokszállási added that the decision increases the likelihood of earlier-than-expected interest rate cuts, potentially within months, as the forint's strength may be becoming excessive. MBH said, in view of the potential easing, it projects EUR/HUF to weaken to 370 in the autumn.

Expectations for a possible shift in Hungary’s monetary policy are growing as analysts increasingly warn that the forint may have strengthened beyond levels justified by economic fundamentals, which is causing short-term pain for many exporting companies, especially smaller ones.

The forint’s recent appreciation has prompted renewed discussion about whether the MNB may soon begin an easing cycle after a prolonged period of tight monetary conditions, Portfolio.hu recaps.

The MNB lowered the rate in February 2026 after 14 months, but did not follow through with monetary easing due to conflict in the Middle East.

CIB Bank chief analyst Mariann Trippon, presenting the bank’s economic outlook for the year, said the forint appeared overvalued across several indicators. In real terms, the forint has appreciated by nearly 10% over the past two years, while Hungary’s productivity remained unchanged.

This has become a major issue among companies operating inefficiently, especially in the food and agribusiness sectors with low import content.

In her view, this divergence suggests that the exchange rate may have moved ahead of underlying economic fundamentals.

Trippon added that the MNB could move towards monetary easing as early as June.

The base rate could fall to 5.75–6.00% by the end of 2026, which is below the median consensus, and monetary easing is set to continue next year with the benchmark lending rate dropping to 5%, she added.

The MBH analyst said the adjustment suggests that the central bank is aware of the widening gap between policy rates and market pricing, which increases the likelihood that rate cuts could come within months.

Árokszállási said recent comments from policymakers and central bank officials suggest that the exceptionally strong forint is becoming less desirable at current levels. MNB deputy governor Zoltán Kurali, at a Warsaw conference, signalled that a rate cut could be on the table in June as the strong forint has improved inflationary outlooks.

During his parliamentary hearing, Finance Minister András Kármán said an improvement in Hungary’s risk perception would be more desirable if it translated into lower interest rates rather than further currency appreciation. This could also be seen as some form of verbal intervention against the forint, Trippon said at the press conference. 

Hungarian exporting companies, feeling the brunt of the forint's excessive appreciation, warned that a combination of a strong currency, high energy costs and growing uncertainty is undermining their competitiveness, according to comments at a business forum organised by Videoton Holding.

The CEO of Hungary’s leading electronic manufacturing service provider  said the company planned the year with an EUR/HUF rate of 393, while the forint is trading some 10% below that level.

Videoton co-owner and co-CEO Péter Lakatos said while current rates do not threaten company operations, they do limit growth prospects, and suggested that a euro rate in the 390–395 range would be more appropriate from a competitiveness perspective.

Participants said many Hungarian manufacturers are increasingly struggling to explain to foreign customers why domestically produced goods are more expensive than similar products from Spain or Germany. At the conference, business representatives welcomed improving relations with the EU, seen as positive for business sentiment, but said several structural factors remain unsustainable in their current form.

Company executives also cited high energy prices as an additional drag on production costs, saying this continues to weaken Hungary’s cost competitiveness in manufacturing. In the current environment, gains in efficiency and productivity may be key to preserving competitiveness.

Analysts said the forint’s recent appreciation has been driven by three main factors: Hungary’s 6.25% base rate, which remains among the highest globally and continues to attract carry trade inflows due to the high real interest rate; a weaker US dollar, which has broadly supported emerging market currencies; and so-called "Tisza trade" impact, as investors are betting that a new government would pursue more pro-EU and market-friendly policies. This also includes the government’s plans to adopt the euro.

In a recent study, economic researcher GKI noted that Hungary’s plans to join the ERM II could improve the country’s credit rating outlook by offsetting fiscal risks. S&P, Moody’s, and Fitch, which have negative outlooks on Hungary’s debt, could give the new government more time for fiscal conditions to improve. Hungary’s rating is just one notch above junk at S&P.