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Commerzbank’s Tatha Ghose describes recent Forint weakness as a high-beta correction that only partly erases post-election outperformance. He expects EUR/HUF to recover toward 350–355 if global risk sentiment improves, but warns that accelerating core inflation and narrowing real interest rates as MNB cuts will later weigh on HUF, limiting the durability of any interim recovery.
High-beta correction then structural headwinds
“The forint has corrected weaker recently through the global market risk-off. This reflects its high-beta status within the eastern European peer group.”
“This near-term correction should not be over-interpreted as the forint has only given up a fraction of its outperformance since the April election, which had brought regime change. The regime-change story itself has not disappointed; Tisza’s ratings remain strong, and Peter Magyar is moving ahead with reforms on multiple fronts.”
“If the global risk backdrop were to ease, the forint would recover a part of its losses, with EUR/HUF moving back to the 350-355 range. Later, however, the familiar constraints and a falling real interest rate will weigh down on the exchange rate.”
“July CPI data showed underlying core inflation measures accelerating.”
“Hungary’s real interest rate is likely to narrow as MNB cuts rates and as underlying inflation momentum stays elevated.”
