The Hungarian forint, often denoted HUF and abbreviated Ft., is the official currency of Hungary. The forint was introduced on August 1, 1946 after the currency pengõ experienced a period of great hyperinflation in the year before. Until recently, the forint was comprised of 100 fillér, but circulation of the fillér ceased in 1999. The name of the forint ironically comes from Florence, where golden money was minted from 1252.
Since 1995, Hungary has pegged the forint against a basket of currencies (in which the US dollar is 30%).
Travel Notes:
When traveling to Hungary, one may face several currency import and export restrictions:
For import and export, local currency exceeding 350,000
Forint requires permission from the National Bank.
For export, amounts equivalent to 100,000 Forint require
permission from the National Bank.
All foreign currency must be declared for import.
| Moody's Rating |
| A1 |
| S&P Rating |
| A- |
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Sovereign credit ratings play an important part in determining a country's access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets. |
What does it look like?
Political Structure
The President of the Republic is elected by the Hungarian parliament every five years. While the President has a largely ceremonial role, he is also responsible for appointing the prime minister. The prime minister selects cabinet ministers and is the sole holder of the right to dismiss them. Each cabinet nominee appears before at least one parliamentary committee in consultative open hearings, awaiting approval from the President.
Hungary's National Assembly is unicameral and consists of 386 members. The highest organ of state authority, the National Assembly initiates and approves legislation sponsored by the prime minister. National parliamentary elections are held every four years. A 15-member Constitutional Court has power to challenge legislation on grounds of unconstitutionality.
Prominent Figures
President: Ferenc Mádl (08/00 - 08/05);
President Elect as of mid-2005 is László Sólyom
Prime Minister: Ferenc Gyurcsány
Governor of the Central Bank (Magyar Nemzeti Bank): Zsigmond Járai
Unique Characteristics
Throughout Central and Eastern Europe, there has been a widespread debate as to whether or not hedge funds are helping countries' currencies. At the center of this debate, Hungary has been profoundly affected by hedge funds. The Hungarian forint has been able to strengthen despite Hungary running high budgetary and current account deficits. This strengthening is due to a mindset spurred by hedge funds. Hedge funds believe that government budget overspending was causing inflation to reach higher levels and the central bank was obligated to strengthen the forint to meet its target. Using this assumption, funds invested in nearly everything that was forint-denominated, causing the forint to appreciate.
Key Economic Factors
Consumer Price Index: The CPI is an instrument used for measuring inflation and gauging movements in prices of products on a constant-quality basis. It measures the change in prices for a given basket of goods and services bought by Hungary residents. Due to improvements in net exports and lowering consumer demand, the structure of growth in Hungary has tended to be anti-inflationary.
Gross Domestic Product: The Gross Domestic Product measures the total production and consumption of goods and services in Hungary. It is important to look for the growth of consumption, investment and government spending components. Hungary's net exports are also very important because of its small, open economy.
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