The Hungarian Prime Minister is already worth his weight in gold.

Peter Magyar's election victory is being received very enthusiastically on financial markets. With a price rise of nearly 3,5%, the forint joins an illustrious list.

Some politicians are worth their weight in gold. As of this week, Peter Magyar can absolutely lay claim to that status. Following his convincing victory in the Hungarian elections, the BUX stock index in Budapest rose by nearly 5% on Monday to its highest level ever. That gain contrasts sharply with the stagnation experienced by other European stock markets. The return of approximately €1,3 billion is largely due to the political turnaround that appears to be on the horizon in Hungary. The reaction of currency markets was even a tad faster and sharper. In the 24 hours after it became clear that Magyar's Tisza Party had achieved a convincing victory, the Hungarian forint shot up by nearly 3,5%.

Rare jump
That currency gain might not make much of an impression at first glance, but with this price surge, the forint joins an illustrious group. Since the British House of Commons elections of 1992, it has been rare for a European country's currency to shoot up by more than 3% following an official vote. That is not to say that an election result has no influence on currency markets. The best example is, of course, the Brexit referendum of ten years ago. When it became known that the United Kingdom would turn its back on the European Union, the pound plummeted by nearly 10% at lightning speed.

Look ahead
The big question, of course, is which direction the forint will take once the dust settles surrounding Magyar's appointment. Experience in financial markets shows that it is unwise to swim against the current. Moreover, Hungary's economy provides more than sufficient grounds for some confidence in the forint. Economic growth this year is set at just over 2%, and inflation has fallen from nearly 5% to less than 2% since the spring of 2025. However, the energy shock resulting from the war in Iran is having a significant impact on Hungary, which is heavily dependent on oil and natural gas imports. It therefore remains to be seen whether there will be room, for the time being, for the Magyar Nemzeti Bank, Hungary's central bank, to lower the policy interest rate of 6,25% a little further, following twelve consecutive rate cuts.

Interest and trust
The interest rate level compares attractively with that of the European Central Bank, but also with the rate of less than 4% maintained by major economies in Eastern Europe such as Poland and the Czech Republic. If Magyar turns his words into deeds in the coming period, it is only a matter of time before the uncertainty premium that crept into the forint under his predecessor Viktor Orbán leaks out again. In that scenario, the recent rebound in the forint is a harbinger of a larger rise. So, head to Hungary quickly; the country could easily become significantly more expensive in the coming years.

Joost Derks

Joost Derks is a currency specialist at iBanFirst. He has over twenty years of experience in the currency world. This column reflects his personal opinion and is not intended as professional (investment) advice.

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