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Forint outlook improves as Hungary weighs further MNB easing

BNY says the Magyar Nemzeti Bank meets this week after a post-election repricing that saw the 10-year government yield fall 200 basis points.

Reported · Written up by our desk · Central Banks

BNY’s Geoff Yu said Hungary remains a constructive story within EMEA, pointing to strong corporate flows and enough spread compensation to support ongoing demand, even as investors weigh supply, power, and energy constraints. In that view, Hungarian Forint positioning could improve if inflation stays contained, helping HUF build a stronger case as a carry currency.

Yu framed the key risk as whether easing can continue despite supply and fiscal constraints, ahead of the Magyar Nemzeti Bank meeting this week. He noted Hungary has already seen a post-election re-rating, including a 200 basis point drop in the 10-year government yield.

BNY also pointed to fiscal dynamics and duration risk, citing the full-year deficit still tracking to reach 7.5% of GDP. At the same time, the bank highlighted record monthly surpluses in June and July as factors that have shifted the near-term picture, even as sovereign flows are described as weaker than in Q1 and Q2.

On the macro backdrop, Yu linked the HUF carry argument to easing in financial conditions across the Eurozone and actions by the US Treasury. He said activity is slowing enough for the MNB to continue easing, while “clear supply constraints” justify some caution on duration.

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