What is the HUF (Hungarian Forint)
The HUF (Hungarian Forint) is the national currency of Hungary, as the country has not adopted the euro (EUR), at this point. The forint gets its name from gold coins called fiorino d'oro, which the city of Florence minted in the middle ages.
The forint subdivides into 100 filler, but these coins no longer circulate as legal tender. The Hungarian National Bank is the country's central bank and manages the issuance and circulation of the forint. Paper banknote have denominations of 500, 1000, 2000, 5000, 10,000, and 20,000 forints. Coins have denominations of 5, 10, 20, 50, 100, and 200 forints.
BREAKING DOWN HUF (Hungarian Forint)
Introduction of the Hungarian Forint (HUF) in 1946 was part of the stabilization of the economy in post-World War II Hungary. The exchange rate of the money was stable until the country adopted a market economy in the early 1990s. During this time hyperinflation reached 35-percent but has become more manageable in the 2000s. At one point, Hungarian inflation was so high, that the currency lost its ability to be converted, an essential aspect of international commerce.
Between 1927 and 1946 the country used the pengö, which replaced the korona. When replaced by the forint, the value of the pengö was so weak, the exchange rate was 1 forint to 200 million pengö.
Economic Backing for the Hungarian Forint
Hungary, located in Central Europe, has seen Celts, Romans, and Huns at their doorstep throughout the centuries. The Treaty of Trianon at the end of World War I set the country's current borders. Hungary joined the Axis powers during World War II and at War's end became a satellite state of the Soviet Union, becoming the Hungarians People's Republic between 1949 and 1989.
In late 1988 to the early 1990s many central and eastern European countries broke with communist rule, and Hungary was one of them. The transition, prompted by inflation and stagnation, was peaceful with the first free elections coming in 1990. With the end of communist rule came the end to subsidies to industries causing a recession. The country sought to become integrated into the rest of Europe during the early 2000s.
Hungary has a skilled labor force and is an export-oriented economy. Trading partners include Germany, Austria, Italy, and France, among others. Industries are varied and include parts for automobiles, radio, and television as the country is the largest Central and Eastern Europe electronics producer.
According to the 2017 World Bank data, Hungary experiences an annual 4.0% gross domestic product (GDP) growth with a yearly inflation deflator of 3.7-percent.
Hungary and the Euro
In 2004, the European Union invited Hungary to join. They applied ten years earlier, and there was significant support for joining at that time.
Hungary first planned to adopt the euro as its official currency in 2008 but has consistently decided to hold off. As of 2018, the country has not set a date adoption. The 2008 financial crisis and 2012 European debt crisis put into sharp relief the dangers of joining the eurozone, as peripheral countries like Greece and Spain have been unable to devalue their currencies to stimulate economic growth.
Hungary, along with other eastern European countries like Poland, the Czech Republic, and Romania, has also dragged their feet in joining the currency union. However, this reluctance has emerged at the same time the European community is seeking more thorough economic integration, leading some economic observers to argue that Hungary will have to adopt the euro eventually. On the other hand, the rise to power of the illiberal Hungarian Prime Minister Viktor Orban has created unrelated tensions between Hungary and much of the rest of the EU and has put into question Hungary’s position in the bloc of nations.