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Investing.com - UBS expects the Hungarian forint to strengthen further to 355-360 against the euro in the coming months following the opposition Tisza party’s constitutional majority victory in weekend elections, according to a research note published this week.
The Tisza party secured more than two-thirds of parliament seats in general elections held over the weekend. UBS said the landslide win should enable a smooth and possibly shorter transition, with markets now focused on the new government’s composition, the speed of legislation to unlock EU funds, and assessment of the fiscal situation.
EUR/HUF now trades around 365, levels UBS projected in late February scenario analysis for an election outcome consistent with unlocking EU funds. The bank said EU funds unlocking at 2.5% of GDP each for 2026 and 2027 would more than offset current account deterioration of 1%-1.5% of GDP from higher energy prices.
UBS said historical balance of payments and real effective exchange rate elasticities suggest a roughly 10% appreciation of the forint’s real effective exchange rate is plausible. The bank continues to prefer the forint over the Polish zloty, citing Poland’s vulnerability to higher energy prices, low real rates, and fiscal deficit exceeding 7% of GDP.
The bank said taking EUR/HUF to 340 by year-end would require unsterilized balance of payments inflows of EUR10 billion to EUR14 billion. UBS noted this scenario could materialize if the new government pursues a high-speed path toward euro adoption, net foreign direct investment rises to 3%-4% of GDP from a five-year average of 1.2%, or a positive productivity shock occurs.
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