EMEA FX Talking: Hungarian love affair continues

Articles EMEA FX Talking: Hungarian love affair continues 08:17 FX Talking Czech Republic Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Investors' love affair with Hungarian assets continues as the new government talks of euro adoption. Expect the forint to hold gains even though the central bank will be cutting the policy rate. Also staying bid, but on the back of a hawkish central bank, will be the Czech koruna.

The Polish zloty should lag, given our view of unchanged policy rates this year Rafal Benecki , Peter Virovacz , David Havrlant , Mateusz Sutowicz , Dmitry Dolgin and Chris Turner Strong forint and koruna outperform as the zloty trails EUR/PLN: Zloty remains stable Spot One month bias 1M 3M 6M 12M EUR/PLN 4.25 Mildly Bearish 4.23 4.24 4.22 4.25 EUR/PLN maintains its narrow range (4.23 – 4.26) despite the turmoil in the Gulf, US dollar strength and a less hawkish approach by the central bank governor in June. The zloty remains relatively resilient to these factors. July was perceived as a live Monetary Policy Council meeting (due to the new projections), but recent dovish MPC comments and a low May CPI support our no-hike view for 2026, while markets still price 75bp in hikes.

These expectations shield the zloty against risk-off waves. Our view on the zloty remains unchanged. We expect a limited rise in EUR/USD in the second half of 2026, sustainable GDP outperformance and expected inflows of EU funds to justify EUR/PLN hovering close to 4.24.

Risks are still linked to geopolitical factors and a dovish MPC. Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts EUR/HUF: Positive factors to maintain the strength of the HUF Spot One month bias 1M 3M 6M 12M EUR/HUF 352.91 Mildly Bearish 350.00 360.00 355.00 360.00 We see the National Bank of Hungary cutting the base rate on 23 June. The extremely favourable May inflation print at 1.8% made us consider the possibility of a 50bp cut, though we still regard this as a remote option.

With almost 100bp of easing priced in until end-2026, the easing cycle won’t derail the forint’s superstar status. Positive factors such as full access to EU funds, upgrades to ratings outlooks and a convergence programme should keep EUR/HUF at around 355 despite the lower interest rate premium. As policymakers prefer lower rates to a stronger forint, we see reactive policies sustaining a 350-360 range in the long term.

Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts EUR/CZK: Czech rate hike on its way Spot One month bias 1M 3M 6M 12M EUR/CZK 24.18 Neutral 24.20 24.15 24.10 24.00 The Czech National Bank will likely proceed with one hike at its June meeting, which has been signalled by ample hawkish talk. However, we expect a split vote with a close call between a hike and flat base rate. In any case, the koruna will further be supported by the positive interest rate differential against the euro in both nominal and real terms.

The recent ECB rate increase is not a substantial adjustment here. Should we see the impact of the Hormuz crisis on real growth in 2Q, the Czech and eurozone economies will both be affected. The economic support for the koruna should prevail and underscore its relative strength.

Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts EUR/RSD: Investment trends keeping RSD supported Spot One month bias 1M 3M 6M 12M EUR/RSD 117.36 Neutral 117.25 117.20 117.20 117.20 EUR/RSD has continued to trade mostly sideways, despite persistent political tensions. However, more positively, the shareholders’ agreement for the sale of the NIS refinery has concluded, after months of uncertainty. The pair sat mostly between the 117.30 – 117.50 range.

Preparations and last-mile investments related to the EXPO 2027 event are also beginning to gather pace. As such, investments are still set to continue to fuel the tailwinds in activity ahead, while the country’s external position remains in check. The still-high, double-digit wage growth acted as a cushion through most of the recent uncertainties and has allowed demand to remain robust.

At its June meeting, the National Bank of Serbia kept the key rate in place at 5.75% - highlighting the short-run inflationary pressures expected. We continue to believe that FX stability should remain a key focus ahead – in January-April, the Bank sold EUR 1205mn to keep the pair stable. Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts USD/UAH: Hryvnia at record low level Spot One month bias 1M 3M 6M 12M USD/UAH 44.82 Mildly Bearish 44.00 44.20 44.40 44.50 As the US dollar strengthened on the back of solid data, USD/UAH rose towards 44.8, a record high level.

The National Bank of Ukraine’s efforts to stabilise the hryvnia are insufficient to fully offset the global financial markets impact. Thus, the outlook for the hryvnia remains cloudy. May was another month in which international reserves of the NBU decreased (by 5.2% after 7.3% in April), mainly due to FX interventions and FX debt repayments.

Nevertheless, the NBU see them as sufficient to maintain FX market stability. Still, the macroeconomic environment remains challenging due to the ongoing war. However, the latest business outlook survey shows further signs of an improvement with construction and industrial companies maintaining the most optimistic outlook.

Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts USD/KZT: Real rates remain high despite the surprise rate cut Spot One month bias 1M 3M 6M 12M 489.43 Bearish 480.00 480.00 490.00 500.00 The tenge lost around 5% over the last month, following the correction in the oil prices. Meanwhile, the updated house view suggests upside. The National Bank of Kazakhstan made a surprise cut in the base rate by 100bp to 17.00%, without any commitment to further easing.

With CPI of around 10% year-on-year, Kazakhstan’s real rates remain high. We expect the tenge to continue to benefit from portfolio capital inflows thanks to the future Euroclear connection, issuance plans, and hopes of an improved position in global bond indices. Meanwhile, the effect of higher oil prices should be muted by the accompanying dividend outflow.

Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts USD/UZS: Long-awaited restart of gold exports lifts UZS Spot One month bias 1M 3M 6M 12M 11977.00 Neutral 11950.00 12000.00 12100.00 12350.00 The soum appreciated against the US dollar by around 1% over the last month, in line with our constructive view. The long-awaited restart of the gold exports was the main support factor. Portfolio inflows, likely supported by the privatisation pipeline and improved sovereign rating prospects should serve as additional reinforcement for the FX market A stronger soum combined with apparent ongoing fiscal consolidation have contributed to a material drop in CPI growth to 5.5% year-on-year as of May, creating room for a cut in the policy rate from the current high level of 14.00%.

Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts USD/TRY: A clear intention to preserve flexibility in policymaking Spot One month bias 1M 3M 6M 12M USD/TRY 46.26 Mildly Bullish 46.65 48.50 51.80 56.80 May inflation has not yet shown a clear return to a disinflation trend, indicating a still challenging outlook. Uncertainty around oil prices, and the spillover into other commodities, continues to pose risks. Food inflation remains uncertain, shaped by agricultural supply expectations and potential fertiliser cost pressures.

Annual inflation is expected slightly below 30%. The Middle East conflict has required a prolonged period of tight monetary policy, accompanied by stricter credit growth caps. These measures reflect a widening current account deficit and increased financial stability concerns after the court decision.

Despite stable lending trends, the central bank has lowered TRY loan growth limits for the retail and corporate segments. Given this backdrop, all policy options continue to be available for the Central Bank of Turkey. This approach signals a clear intention to preserve flexibility in policymaking depending on changing geopolitical conditions.

In the near term, we think the CBT will remain in a wait-and-see approach before deciding whether to reduce the effective cost of funding back toward the policy rate. Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts USD/ZAR: Headwinds growing, including El Nino Spot One month bias 1M 3M 6M 12M USD/ZAR 16.26 Mildly Bullish 16.50 16.75 16.75 16.50 Higher US rates and a tech-led sell-off in risk assets have started to weigh on the rand. But last month, the South African Reserve Bank pre-emptively hiked to 7%, leaving the rand with real rate protection of nearly 3%.

The SARB has presented a worst-case scenario for rate hikes if the Strait of Hormuz remains closed for longer and El Nino hits hard. This could see SARB hike to 7.75%. We are raising our USD/ZAR profile because of the Fed story but still see it lower through 2027 on high yields, strong commodity prices and eventually lower rates in the US.

But a heavy El Nino this November-February, causing drought in Asia and Africa, could be a major rand negative. Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts USD/ILS: Bank of Israel intervenes for first time since 2022 Spot One month bias 1M 3M 6M 12M USD/ILS 2.92 Bullish 3.00 3.00 3.00 3.05 We had felt that the Bank of Israel did not want USD/ILS to be trading under 3.00. Over the last month it intervened to the tune of $800m and also cut rates by 25bp to 3.75%.

Unlike elsewhere in the world, inflation is on target and the BoI is seen as having plenty of room to cut. The market has probably got ahead of itself, however, in pricing a further 150bp of easing. The FX intervention is the first since 2022 and quite a big deal.

Previously it had been thought Washington had warned Israel away from intervention – that policy may have changed now. A stronger dollar and a tech world moving into frothy valuations leave the tech-sensitive shekel a little fragile this year. Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.

The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Rafal Benecki Chief Economist, Poland Rafal Benecki is a Chief Economist at ING in Poland, joining in 2005. Prior to this, he was the head of the Economic Analysis Bureau at Millennium Bank in Warsaw.

He has an MSc in Financial… Peter Virovacz Chief Economist, Hungary Peter Virovacz is a Chief Economist in Hungary, joining ING in 2016. Prior to that, he has worked at Szazadveg Economic Research Institute and the Fiscal Council of Hungary. Peter studied at the… David Havrlant Chief Economist, Czech Republic David joined ING in 2024 as Chief Economist for the Czech Republic.

He gained professional experience at the Czech National Bank and international institutions such as the ECB, the EC,… Mateusz Sutowicz Senior Economist, Poland Mateusz is a Senior Economist based in Warsaw and joined ING in 2025. He graduated from the Catholic University of Lublin and previously worked as a financial market analyst at Bank Millennium for… Dmitry Dolgin Chief Economist, CIS Dmitry is a Chief Economist covering Russia and CIS countries. He joined ING in 2018 and has a decade of experience in macroeconomics and FX strategy with Alfa-Bank and Gazprombank.

Dmitry… Chris Turner Global Head of Markets and Regional Head of Research for UK & CEE Chris is Global Head of Markets and Regional Head of Research for UK & CEE. Together with his team, he provides short and medium-term FX recommendations for ING's corporate and…