MUFG’s Senior Currency Analyst Lee Hardman reports that Hungary’s election ended Viktor Orban’s 16-year rule, with Peter Magyar’s Tisza party on course for a supermajority. Planned institutional and constitutional changes could restore EU norms and unlock over EUR20 billion in frozen EU funds. The forint has rallied over 2% versus Euro and US Dollar, reinforcing its strong emerging market performance.

Forint rallies on Hungary election result

“The other main development over the weekend was the election result from Hungary which has brought an end to Prime Minister Viktor Orban’s 16-year grip on power. The main opposition Tisza party led by Peter Magyar won a decisive victory and is currently on course for a supermajority.”

“If the Tisza party is able to secure a two-third majority it would enable new Prime Minister Peter Magyar to more easily dismantle the Orban system. He has already vowed to oust Orban’s key loyalists such as the president, top justices, the chief prosecutor and heads of several state regulators.”

“The changes will return Hungary back towards the European mainstream, and help to unlock more than EUR20 billion of EU funds that have been frozen due to concerns over the rule-of-law and corruption. He has also vowed to introduce a two-term limit for prime ministers to prevent Hungary from reverting to authoritarian rule.”

“It should also make life easier for the EU. Under former Prime Minister Viktor Orban, Hungary blocked a EUR90-103 billion loan package intended to support Ukraine, and has repeatedly delayed or blocked EUR aid and sanction related to Ukraine.”

“The positive political developments have triggered a powerful rally for the forint which has strengthened by over 2% against the euro and US dollar. The price action reinforces the forint’s position as one of the best performing emerging market currencies this year.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)