Hungarian Forint: Recovery Story Tied to Eurozone Entry – ING

The National Bank of Hungary cut its policy rate by 25 basis points to 5.50%, extending its monetary easing path. According to ING Chief Economist Peter Virovacz, the terminal rate of this easing cycle is expected to land around 4.75%, implying further room for cuts.

**Tension Between Rate Cuts and Forint Moves**

EUR/HUF is currently trading near 360.3999. From a rate perspective, cuts typically weaken a currency, but ING analyst Chris Turner notes in a report that Hungary's push to join the eurozone is creating potential upside pressure on the forint. Market sources indicate the government will publish its fiscal strategy in October; if it signals faster convergence, that could positively impact EUR/HUF and even pull it back toward the 350 level.

**Volatility Risks Remain**

Despite support from eurozone accession expectations, short-term volatility risks for the forint have not faded. According to earlier ING analysis, EUR/HUF could trade in the 385–390 range in some scenarios, with fundamentals determining the outcome across different paths. The current level near 360 remains well below that range's upper bound, suggesting market sentiment toward Hungarian assets is relatively optimistic.

**Strategy Implications**

ING advises investors to consider positioning in forint-related trades ahead of the Hungarian fiscal announcement, as the release is expected to boost the forint's value over the coming months. However, the drag from narrowing rate differentials amid the easing cycle, along with geopolitical uncertainties, remain variables that warrant continued monitoring.