The Hungarian forint (HUF) is the official currency of Hungary. It has a long and fascinating history intertwined with the country’s economic and political changes over the past century. This article will provide a comprehensive overview of the HUF, including its origins, current value, circulation, exchange rates, and role in Hungary’s economy. Whether you are a forex trader interested in the forint or simply want to learn more about Hungarian currency, this guide has all the key details.
Origins and History of the Forint
The forint dates back to the middle ages, first minted by the Kingdom of Hungary in 1325. The name comes from the city of Florence, Italy, where gold coins called fiorino d’oro were minted. Hungary modeled its forint coins after the Italian ones, with similar gold content and purity.
For centuries the forint was the main currency used in Hungary, though foreign currencies like the Austrian schilling also circulated. After World War I the forint collapsed with massive hyperinflation due to economic turmoil in Hungary. It was replaced by the pengő in 1927, which suffered from even worse hyperinflation after WWII before being changed to the forint again in 1946.
The postwar years under Soviet control meant the forint was not freely convertible to other currencies. The exchange rate was fixed and strictly controlled by the government. This resulted in a black market for foreign currencies like the US dollar.
After the fall of communism in 1989-90, Hungary transitioned to a market economy. Restrictions on the forint were finally lifted and it became convertible in 1991. The exchange rate also shifted from being fixed to a free-floating rate determined by supply and demand.
The modern Hungarian forint was reintroduced on January 1, 1999 when it replaced the old forint at a rate of 1 new forint to 1,000 old forints. Hungary underwent denominational reform to curb ongoing inflation and make conversion rates simpler.
The current forint has become much more stable under Hungary’s new economic policies. However, some inflation risks remain which will be discussed later in this article.
HUF Currency Denominations
Today the forint is issued in both banknotes and coins. The most frequently used HUF banknotes are as follows:
- 20,000 forints – The highest valued banknote and largest in size. The main color is purple.
- 10,000 forints – Often used for larger purchases, blue in color.
- 5,000 forints – A mid-range red banknote.
- 2,000 forints – Green and smaller in size.
- 1,000 forints – The smallest current banknote, gray/lavender in color.
Many shops and restaurants will not accept the 1,000 forint notes due to concerns over counterfeiting. Lower denomination banknotes such as 100, 200, and 500 forints are no longer in circulation but still accepted.
Forint coins come in the following denominations:
- 500 forints – The largest coin which replaced the 200 forint banknotes. Silver in color.
- 200 forints
- 100 forints
- 50 forints
- 20 forints
- 10 forints
- 5 forints – Smallest in circulation which replaced the 1 and 2 forint coins. Copper colored.
It’s a good idea to carry a mix of HUF banknotes and coins when traveling to Hungary. Smaller vendors may not accept high value banknotes, while coins come in handy for metro tickets, snacks, tips and more.
Current Exchange Rates and Value
The Hungarian forint has fluctuated quite a bit over the past decade, both strengthening and weakening versus other major currencies. It has also undergone high inflation at some points. Here are some of the current key HUF exchange rates as of August 2023:
- 1 USD = 404 HUF – The US dollar exchange rate provides a benchmark for the forint’s value. The HUF has weakened from around 230 per dollar 10 years ago.
- 1 EUR = 410 HUF – The euro rate is very close to the USD, which is typical due to the prominence of both currencies.
- 1 GBP = 481 HUF – The British pound trades much higher vs the forint.
- 100 JPY = 2.92 HUF – Exchanging yen for forints returns a small amount due to the weak yen.
- 1 AUD = 273 HUF – The Australian dollar converts favorably to the HUF.
- 1 CAD = 304 HUF – Similar to the AUD, the Canadian dollar trades well against the forint.
Exchange rates can always change rapidly, so it’s best to check a source like Oanda.com for the latest live figures when traveling or making transfers.
Over the past year, the forint has weakened about 10% against the USD and EUR. This makes visits to Hungary very affordable for foreign tourists, as their money goes further when exchanging currencies.
Locals have a different experience, as inflation has caused the prices of imported goods and travel abroad to increase substantially. More on Hungary’s inflation woes later on.
HUF Banknotes and Coin Images
To help you recognize Hungarian forint currency, here are images of the banknotes and coins described in the denominations section:
20,000 Forint Banknote
10,000 Forint Banknote
5,000 Forint Banknote
2,000 Forint Banknote
1,000 Forint Banknote
Hungarian Forint Coin Denominations
As you can see, the paper banknotes feature prominent Hungarian figures, buildings, and symbols while the coins have Hungary’s coat of arms, the Holy Crown of Hungary, and more.
HUF Circulation and Cash Use
There are currently over 5.7 billion Hungarian forint banknotes in circulation and almost 50 billion coins. The total currency in use passed 56.8 trillion HUF in value as of 2021 according to the Hungarian National Bank.
Cash transactions remain popular in Hungary, although electronic payments are also widely used. It’s always a good idea to have local forint currency on hand, especially when dealing with street markets, small shops, restaurants and taxis.
Many ATMs in Hungary let you take out Hungarian forint using your home debit card and PIN. You will get the best exchange rate and low fees typically with bank withdrawals rather than exchanging money at the airport.
If paying by credit/debit card, Visa and Mastercard are accepted almost everywhere. American Express and Diners Club have more limited acceptance. Contactless payment options like Apple Pay are also available at lots of stores.
When shopping, dining or using services in Hungary, it’s common courtesy to carry small HUF bills and coins for tipping. Forint coins come in handy for bathrooms, coat checks, and snack & drink machines as well.
Forint and Hungary’s Economy
As the national currency, the forint plays an important role in Hungary’s open economy. While not one of the top traded currencies worldwide, the HUF is heavily involved in Hungary’s foreign trade, tourism, and banking.
Some key ways the forint impacts the Hungarian economy:
- Tourism – Over 60 million foreign visitors came to Hungary in 2019. Their exchanged money contributes significantly to the economy. A weaker forint benefits this industry.
- Trade – Hungary’s main trading partners are Germany, Russia, China, Austria and Poland. The forint facilitates these exports/imports.
- Remittances – Money sent into Hungary from abroad totals over 2 billion EUR annually. This helps many families.
- Loans and Debt – Much of Hungary’s national debt is denominated in foreign currencies. Forint depreciation makes servicing this debt more expensive.
- Inflation – Higher inflation driven by a weak forint has become an issue. Consumer prices have risen over 10% in 2022.
- Investing – Hungary wants to attract more foreign direct investment into its economy. Keeping the forint relatively stable is important.
Forint Outlook and Forecasts
What does the future look like for the Hungarian forint in the coming years? According to many currency analysts and investment banks, the forint could remain under pressure but stabilize somewhat after 2022’s turbulence.
Some factors impacting the HUF outlook:
- Inflation should peak in 2022 then start declining if the Hungarian National Bank (MNB) raises interest rates high enough. This could eventually allow some forint strengthening.
- The Russia-Ukraine conflict led to the forint dropping over 10% against the euro in 2022. An end to the war would remove a key risk.
- Potential EU funding cuts related to rule of law disputes could strain Hungary’s budget. This may pressure the forint.
- If global recession fears ease and commodity prices decline, it would relieve inflation concerns and boost the forint.
- The country’s large trade and fiscal deficits remain background risks that could lead to more forint weakness longer-term.
Based on these drivers, analysts expect the EUR/HUF rate to trade around 400 at the end of 2023 before potentially appreciating back into the mid-300s by 2025 if inflation is tamed.<H6>
Conclusion
The Hungarian forint has undergone an eventful journey over the past 100 years – from hyperinflation to Soviet control to current fluctuations. While not without some ongoing risks, the HUF now provides a stable currency for Hungary’s transition to a modern market economy.
For travelers, the forint offers an affordable vacation full of history, culture and stunning scenery. Business can benefit from Hungary’s skilled workforce and proximity to European markets. And investors may find opportunities in Hungarian real estate, stocks and other assets.
Hopefully this deep dive provided you with all the key details and history around the Hungarian forint. It’s a currency with an interesting past and promising future at the heart of Hungary.
