What Is the Hungarian Forint (HUF)?
The term Hungarian Forint (HUF) refers to the official and national currency of Hungary. The name was first used between 1868 and 1892 but modern forint was introduced in 1946. The currency is issued and maintained by the country's central bank, the Hungarian National Bank. Banknotes are issued in denominations ranging from 500 to 10,000 forints while coins are minted between 5 and 200 forints. The forint is divided into 100 fillér, but these coins are no longer in circulation due to high inflation.
- The Hungarian Forint is the national currency of Hungary.
- The forint was introduced in 1946 in order to stabilize the national economy after World War II.
- The country's central bank, Magyar Nemzeti Bank, is responsible for issuing and maintaining the value of the currency.
- The forint isn't pegged to any currency.
- While it is an EU member, Hungary hasn't adopted the euro.
Understanding the Hungarian Forint
Hungary's national and only official currency is the forint. The country's national bank, referred to by Hungarians as Magyar Nemzeti Bank, is responsible for issuing and maintaining the forint's value. Established in 1924, the bank also controls the forint's circulation.
Forint banknotes are issued in denominations of 500, 1,000, 2,000, 5,000, 10,000, and 20,000 forints. Coins are issued in denominations of 5, 10, 20, 50, 100, and 200 forints. Bills are printed by the Hungarian Banknote Printing Company while coins are minted by the Hungarian Mint. As mentioned above, one forint is divided into 100 fillér. These coins were removed from circulation in 1999.
The forint is denoted in the foreign exchange (forex) market as Ft and is commonly referred to by its abbreviation HUF. It is not pegged to any currency and no currencies are pegged to it either. Although the euro isn't used in the country, some merchants do take the currency—notably large hotels and merchants. The exchange rate is generally lower than most exchange offices. Change is normally given in forints.
Hungary relies on a skilled labor force to drive its export-oriented economy. Major trading partners include Germany, Slovakia, Italy, Romania, and Austria. Top industries include car and car parts manufacturing, and producing components for radios and televisions. According to World Bank data, Hungary registered 4.57% gross domestic product (GDP) growth in 2019 and 3.33% inflation.
The equivalent of one U.S. dollar as of March 7, 2021.
Hungary joined the European Union (EU) in 2004. The country applied 10 years earlier, and there was significant support for joining at that time. Although Hungary is preparing the adopt the euro, it hasn't set a target date to make the switch. That's because the federal government and the central bank are reluctant to adopt the common currency. In fact, Hungary's central bank governor Gyorgy Matolcsy described the euro as a "trap" and a "strategic error."
The 2007-08 Financial Crisis and the European sovereign debt crisis put into sharp relief the dangers of joining the eurozone, in which 19 of the 27 EU member countries adopted the single currency. By giving up control of their own monetary policy, countries such as Greece and Spain have been unable to devalue their currencies in order to stimulate economic growth.
In addition to Hungary, other European countries that don't use the euro include Bulgaria, Croatia, the Czech Republic, Poland, and Romania, though the European community is seeking more thorough economic integration.
History of the Hungarian Forint
The forint was introduced in 1946 as a way to stabilize the national economy following World War II. The name comes from the gold coins of Florence called fiorino d'oro, which were struck beginning in 1252 and used throughout the Austro-Hungarian empire. The exchange rate of the currency was relatively stable until the country adopted a market economy in the early 1990s.
Hungary experienced some of the worst bouts of hyperinflation of any country in the world. The acceptance of the 1920 Treaty of Trianon following World War I had a series of devastating effects on the economy, not to mention the loss of more than 70% of its pre-war territory and over 60% of its pre-war population. Hyperinflation reached 35% during the 1990s. The economy did make some improvements in the 2000s even though inflation was so high, the currency lost its ability to be converted.
Of Hungary’s 10 largest cities prior to the War, five were incorporated by neighboring countries. Saddled by war reparations and the loss of much of their tax base, the Hungarian currency lost almost all its value. At its peak in 1923, annualized inflation reached nearly 1,200%.
From 1988 and into the early 1990s, many central and eastern European countries—including Hungary—broke with the communist rule. The transition, prompted by inflation and stagnation, was peaceful. The first free elections in Hungary were in 1990, and the country sought to become integrated into the rest of Europe during the early 2000s.