Hungary’s parliamentary election saw Péter Magyar’s centre-right, pro‑EU Tisza party defeat Viktor Orbán’s nationalist Fidesz. Early results projected a two‑thirds majority in the 199‑seat parliament, and Orbán conceded defeat.
Turnout was reported at a record 77.8%, up from 67.8% at the previous parliamentary election. The result reduced concerns about Hungary blocking or delaying talks on the EU’s next seven‑year budget and aid packages for Ukraine.
The Forint strengthened after the vote, with EUR/HUF falling by more than 2% to its lowest level since February 2022. This move was linked to lower political risk premia.
Magyar, a former Orbán ally, campaigned on rebuilding trust with the EU and NATO, restoring the rule of law, and joining the euro area by 2030. He did not set out a clear shift away from Orbán’s broader approach, and did not call for an abrupt cut in ties with Russia or clearly support providing military aid to Ukraine.
Following the decisive victory for Péter Magyar’s Tisza party last year, we saw an immediate and sharp reaction in the currency markets. The Hungarian Forint strengthened significantly as the political risk premium that had been weighing on it for years began to evaporate. EUR/HUF fell over 2% in the immediate aftermath, a move we hadn’t seen since early 2022.
Looking back from today, April 13, 2026, that initial move was the start of a longer-term trend. The Forint has since stabilized and maintained most of its gains, as the central bank has been able to focus on inflation, which has cooled to 3.6% as of last month’s reading. This is a stark contrast to the double-digit inflation we were seeing a few years ago.
The new government’s pro-EU stance has also been very positive for the country’s debt, reducing borrowing costs. Hungarian 10-year government bond yields have compressed by over 150 basis points since the election, now trading around 5.25%. This sustained decline suggests that derivative plays on interest rates, such as receiving fixed in swap agreements, remain attractive.
With the main political uncertainty resolved last year, implied volatility on the Forint has fallen to multi-year lows. This makes strategies like selling options, such as strangles, potentially profitable as long as the currency continues its gradual appreciation or remains range-bound. We saw a similar collapse in volatility in the Polish Zloty following their own pro-EU election result in late 2023.
However, we must remember that the new government is not seeking an abrupt break in ties with Russia. This lingering geopolitical uncertainty puts a potential cap on the Forint’s strength against the Euro. Any escalation in regional tensions could quickly reverse some of the recent gains.
The improved sentiment has spilled over into the wider Central and Eastern European region. We have seen increased inflows into regional equity ETFs, with the iShares MSCI Emerging Markets Eastern Europe Capped ETF (IEUR) up over 12% in the last six months. This suggests that positive sentiment towards Hungary is lifting its neighbors, like Poland and the Czech Republic, as well.
