The results confirm the correct bets of those investors who were preparing for a victory of Peter Magyar’s Tisza party. The currency strengthened 2% to 367.41 against the euro in early Asian trading, reaching its highest level since April 2022.
Getting a majority vote means the market will have “another reason for the forint to continue to rise,” said Frantisek Taborski, ING Bank NV in. London. “The rise could come even as the market’s risk appetite declines following the U.S.-Iran peace talks over the weekend,” Bloomberg reports.
Magyar’s rise to power is seen as a factor in unlocking access to EU funding. “Tisza has also pledged to take steps toward eurozone membership, which would lower Hungary’s borrowing costs, which are currently among the highest in the EU given the local currency yield on 10-year government bonds.”
“We can expect a significant warming of relations between Budapest and Brussels,” said Michal Jóźwiak, a currency analyst at Ebury.
Betting on seismic shifts in Hungarian politics has already helped the forint rise. Last year, it rose 7 percent against the euro and 21 percent against the dollar, the most among major emerging markets after the Russian ruble.
Morgan Stanley economists believe Hungarian stocks “will continue to outperform.” If the new government manages to unlock access to EU funds, this could significantly boost market confidence,” they wrote in a note to clients.
