A gradual depreciation of HUF vs. EUR is likely, but analysts at TD Securities still expect the Forint to record positive returns when accounting for carry.

May and June will likely be a period of increased EUR/HUF volatility

“We don't see any room for EUR/HUF to permanently move below 400. We think that a gradual HUF spot depreciation in the order of magnitude of 5-10% is in the interest of the NBH. As such, we think that EUR/HUF will gradually move higher through 2023 and end the year at 425.”

“Unless EUR/HUF falls notably below 400, the NBH will probably attempt to ease the longer-term rates first, rather than the overnight rate.”

“May and June will likely be a period of increased EUR/HUF volatility as EU member states will need to extend the current sanctions on Russia linked to Russia's invasion of Ukraine.”