HUF - Hungarian Forint

Overview of the Hungarian Forint (HUF)

The Hungarian Forint officially came into circulation and use on August 1, 1946, marking an important milestone in Hungary's economic stabilization process after World War II. 

The Hungarian Forint is also known by many names such as: Magyar forint (in Hungarian), HUF, Hungarian Forint, forintok (plural), Ft, Hungarian money... 

The currency symbol is Ft and the currency code is HUF. One forint is divided into smaller units called fillers, with the convention that 1 Ft = 100 fillers. However, since 1999, this currency unit has no longer been in circulation and use.

History of the Hungarian Forint (HUF)

The Forint was officially introduced in 1946 with the aim of stabilizing Hungary's economy after experiencing post-war inflation due to the severe devaluation of the Pengő. The name Forint also originates from "fiorino d’oro," the gold coin used in the city of Florence in the 13th century.

Before the Hungarian Forint, the Pengő was used since 1927 and went through the worst inflationary peaks in history, leading to the need for a replacement.

The introduction of the Forint helped stabilize the economic situation and maintain stability for many decades, although it also faced certain challenges due to political and economic fluctuations in the region and globally. 

The transition to a market economy in the early 1990s adversely affected the value of the forint, and by 1991, inflation peaked at 35%. Since 2001, inflation has been controlled at a single-digit level, and the forint has been declared fully convertible.

As a member of the European Union, Hungary set a long-term goal of replacing the forint with the euro, but by 2020, this goal seemed unfeasible.As a member of the European Union, Hungary has a long-term goal of replacing the forint with the euro, but by 2020 this goal seemed unfeasible.

The currency units that were once used in Hungary

• Florentinus Coin: Used since 1325 during the reign of King Charles Robert. This is a type of gold coin based on the fiorino d’oro of Florence.

• Gulden (Forint): Used from 1868 to 1892, the forint was the name of the currency in the Austro-Hungarian Empire.

• Krone: Introduced in 1892 and used until 1918 when the Austro-Hungarian Empire dissolved.

• Korona: After World War I, the korona coin replaced the krone and was used until 1925.

• Pengő: Introduced in 1927 to replace the korona and used until 1946. The Pengő was also a currency that experienced severe hyperinflation in Hungary.

The Hungarian Forint (HUF) Denominations

Currently, the Hungarian Forint is in circulation in two forms: coins and banknotes. Among them, the denominations of these currencies are as follows:

• Denominations of banknotes: 500 Ft – 1,000 Ft – 2,000 Ft – 5,000 Ft – 10,000 Ft – 20,000 Ft have been issued since 1997 by the Hungarian National Bank.

• Coin denominations: 5 Ft, 10 Ft, 20 Ft, 50 Ft, 100 Ft, 200 Ft have been minted by the Hungarian Mint since 1990.

The Hungarian Forint (HUF) exchange rate

The exchange rate of the Hungarian Forint has been officially floating freely against the euro since February 26, 2008. This means that the value of the forint is determined based on supply and demand in the market.

Previously, the Hungarian government had also implemented various exchange rate regimes, including both fixed and controlled floating systems. In the period from 2001 to 2008, Hungary maintained a fluctuation band of +/- 15% around the central exchange rate against the British pound.

History of the Hungarian Forint (HUF) exchange rate

Since its inception, the Hungarian Forint has undergone various fluctuations in exchange rates. Specifically:

• Before 1946: Before the forint was introduced, Hungary used various currencies and implemented a fixed or tightly controlled exchange rate system.

• From 1946 to 1990: After World War II, the Forint was introduced in 1946 and was applied under a fixed exchange rate regime with the aim of stabilizing the post-war economy.

• From 1990 to 2001: After the transition to a market economy in early 1990, Hungary adopted a controlled floating exchange rate regime. The Central Bank of Hungary will intervene in the foreign exchange market to maintain the exchange rate within a certain range.

• Period 2001 - 2008: From 2001, a controlled floating exchange rate system was implemented, with a fluctuation band of ±15% against the euro. This allows for a more flexible exchange rate, but the central bank can still intervene promptly when necessary. The exchange rate of the HUF at this time is 200 - 250 HUF = 1 USD.

• In 2012: The exchange rate exceeded 300 HUF for 1 USD and continued to rise.

The value of the Hungarian Forint (HUF)

The connection between the Forint and the gold standard

Before 1892, Hungary used the gulden based on silver, not yet adopting the gold standard. However, the value of this currency was not stable due to many fluctuations in silver prices.

In 1892, the Austro-Hungarian Empire officially adopted the gold standard according to the plan of the Hungarian Ministry of Finance, including the introduction of the krone at the exchange rate of 2 kroner = 1 gulden. (forint)

After World War I, the Austro-Hungarian Empire dissolved in 1918, and Hungary and other successor states established their own currencies. However, due to economic and political upheavals, the gold standard was not maintained.

The relationship between the Hungarian Forint and the Euro

Hungary joined the European Union (EU) in 2004, but has not yet switched to using the Euro. In recent years, there have been many discussions about whether Hungary could switch to the Euro, but currently, the Forint remains the official currency of the country.

The exchange rate of the forint and euro has continued to fluctuate recently, reflecting changes in the Hungarian economy and the Eurozone. Currently, 1 Hungarian forint = 0.0025 euro. The exchange rate fluctuates based on economic and political factors.

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