Global Markets Daily HUF Stocktake — Energy Vol Now, Domestic Drivers Later

Economics Research 5 August 2026 | 10:31PM BST

Global Markets Daily: HUF Stocktake — Energy Vol Now, Domestic Drivers Later

n The Hungarian Forint (HUF) has given back nearly half of its post-election gains Teresa Alves | versus the Euro. In this Global Markets Daily, we assess the Forint’s performance Goldman Sachs International against both local and global factors, especially the renewed spike in energy prices. n According to our model, HUF decoupled from global factors through the election window in April, with ‘residual’ outperformance versus our model’s inputs reaching 9pp. This unexplained gap stabilised from mid-May – standing currently at 6pp – and, since then, EUR/HUF moves look to have broadly realigned with global factors. That is, even as the Forint has depreciated since mid-June, this depreciation can be mostly explained by global factors, and HUF has retained most of its election-driven country-specific repricing. n Both our modelling of FX performance and the underlying macroeconomic fundamentals highlight that energy prices remain the key near-term driver of HUF. Our model of Hungary’s net energy balance points to a deficit of 4% of GDP under our oil and natural gas forecasts, relative to -2.2% at the end of 2025, and broader electricity generation disruptions could lead to a further terms-of-trade deterioration. Upcoming EU fund inflows can more than offset the impact of higher energy prices on external balances, but these will only be disbursed in Q4. n Overall, we think the post-election move lower in EUR/HUF was warranted by shifting domestic fundamentals not captured by these models, and we maintain a constructive medium-term outlook, with a 6-month target for EUR/HUF at 350. However, as high frequency betas suggest, better HUF spot performance over the near term likely requires energy prices to fall on a sustained basis, especially as additional positive local catalysts – which could lead the ‘residual’ to increase again and catalyse further bond inflows – are likely to materialise only later in the year. These include the disbursement of EU funds as well as the announcement of a lower inflation target, the government’s budget plans, and its Euro adoption programme, which our economists expect in October/November. Among these, the budget announcement is where we see more two-sided risks for HUF, whereas we think lowering the inflation target to 2% is currency-positive. While benign inflation developments may mean less focus on further FX appreciation by policymakers, we think there continues to be a sensitivity to depreciation that would undermine reaching 2% inflation and, further out, participating in ERM II. n We think funding HUF longs with PLN can help neutralise this exposure to energy

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Goldman Sachs Global Markets Daily

prices to a large extent, and benefit from the dovish shift in the NBP’s reaction function, while retaining exposure to HUF convergence relative to its regional peers. We initiate a short PLN/HUF trade recommendation with a target of 80.5 and a stop of 87.

HUF Stocktake — Energy Vol Now, Domestic Drivers Later

The Hungarian Forint (HUF) has given back nearly half of its post-election gains versus the Euro: EUR/HUF declined by 7% from April 10 to June 16, but now stands only ~3% below its April 10 level (the election was held on April 13). Nevertheless, the Forint is still around 6% stronger versus the Euro year-to-date.

In today’s Global Markets Daily, we assess the Forint’s performance in the context of both local and global factors, especially the renewed spike in energy prices.

After Election-led Outperformance, EUR/HUF Moves Largely Consistent with Broader Market Drivers First, we look at daily moves in EUR/HUF, oil and European natural gas prices since the start of the Iran conflict (Exhibit 1). While this is a simple framework, shifts in energy prices can help explain a non-negligible share of EUR/HUF daily variation over this period (34% for daily moves in oil and 24% for natural gas).…