The Hungarian forint appreciated sharply after Prime Minister Viktor Orban conceded defeat in Sunday’s election, with the pro-European opposition’s victory expected to help unlock billions of euros in European Union funding, Bloomberg reported.
The Hungarian currency rose 1.9% on Monday morning to 367.65 forints per euro, after previously hitting its highest level since April 2022. The results of Sunday’s election confirmed investors’ bets on a historic victory for Peter Magyar’s Tisza party, according to Agerpres.
The results represent a rejection of Orban’s so-called “illiberal democracy,” which has been supported by both US President Donald Trump and Russian leader Vladimir Putin. With nearly 99 percent of the votes counted, the Tisza party is set to win a two-thirds majority in parliament, allowing it to quickly pass legislation and dismantle the system Orban has built over 16 years in power.
A supermajority for Peter Magyar means the market will have “one more reason to extend the forint’s rise,” said Frantisek Taborsky, an analyst at ING Bank. The gains could even come amid a shift in market sentiment after the collapse of peace talks between the United States and Iran, Taborsky said.
Analysts believe Magyar’s victory will help unblock Hungary’s access to European funds, which have been partially frozen by Brussels over Orban’s rule of law violations. The Tisza party has also promised to take steps towards joining the eurozone, which would reduce Hungary’s borrowing costs, currently among the highest in the EU, with the yield on 10-year government bonds in local currency around 7% over the past 12 months.
“We can expect a significant thaw in relations between Budapest and Brussels,” said Michal Jozwiak, a currency analyst at Ebury. That should lead to the release of around 17 billion euros in EU funds, as well as low-interest loans for defense spending, providing a “significant growth stimulus for the Hungarian economy,” Jozwiak said. He added that a supermajority could lead to a further rise in the forint and Hungarian stocks.