Hungarian Forint (HUF): What It Is, How It Works, and Examples

Huf, the currency code for the Hungarian forint, signifies Hungary’s national and sole official currency. Established in 1924, Magyar Nemzeti Bank, Hungary’s central bank, undertakes the issuance and management of the forint, aiming to achieve and maintain price stability while supporting government economic policies.

In the foreign exchange market, the forint is denoted as ft and carries no peg to any specific currency. Noteworthy is its significant exchange position alongside the U.S. dollar and the euro.

Issued in denominations from ft500 to ft20,000, forint banknotes are complemented by coins ranging from ft5 to ft200. The Hungarian Banknote Printing Company handles banknote production, while the Hungarian Mint is responsible for coin minting. A historical note: fillér coins, representing fractional values, were phased out in 1999 due to soaring inflation.

The exchange rate, as of April 2022, was approximately ft346.43 for one U.S. dollar.

Despite Hungary’s EU membership since 2004, the nation has resisted adopting the euro. This reluctance, expressed by central bank governor Gyorgy Matolcsy, stems from concerns about the euro being perceived as a “trap” and a “strategic error.” While some Hungarian merchants, especially large hotels, accept euros, the exchange rate is generally less favorable than official exchange offices.

Similar to Hungary, other European countries like Bulgaria, Croatia, the Czech Republic, Poland, and Romania remain outside the eurozone, reflecting a collective cautiousness toward deeper economic integration within the European community.

The modern Hungarian forint emerged in 1946, a strategic move to stabilize the nation’s post-World War II economy. Its nomenclature traces back to the fiorino d’oro, gold coins used in the Austro-Hungarian empire since 1252.

Historical economic challenges include the aftermath of the 1920 Treaty of Trianon, causing substantial territorial and population losses. The forint faced severe devaluation, with hyperinflation peaking in 1923 at nearly 1,200%. Transitioning from communist rule in the late 1980s and early 1990s brought about peaceful changes, although hyperinflation persisted in the 1990s. Despite economic improvements in the 2000s, persistent inflation hindered the forint’s convertibility.

Hungary’s export-driven economy relies on skilled labor, with key trading partners including Germany, Slovakia, Italy, Romania, and Austria. Notably, the country reported a -4.7% GDP growth in 2020 and 5.1% inflation in 2021, primarily due to the global economic fallout triggered by the COVID-19 pandemic, according to World Bank data.

Hungary’s resistance to adopting the euro is rooted in concerns expressed by its central bank governor. The euro is viewed as a “trap” and a “strategic error,” leading to the nation’s reluctance to make the switch despite being an EU member.

Hungarian forint banknotes are available in denominations ranging from ft500 to ft20,000.

Hungary’s forint plays a crucial role in its export-oriented economy, which heavily relies on a skilled labor force. Key trading partners, including Germany, Slovakia, Italy, Romania, and Austria, contribute to the country’s economic landscape. However, persistent inflation and economic challenges have influenced the forint’s performance.

The forint experienced hyperinflation in the 1990s, primarily during the transition from communist rule. Economic factors such as inflation and stagnation prompted the shift to a market economy, leading to challenges like hyperinflation reaching 35% during that period.