Hungary Assets Rally Into Sunday’s Election on Orban-Exit Bets
Hungary’s election rally has pushed the country’s bonds and currency to the brink of multi-year highs ahead of Sunday’s ballot, which investors anticipate will end Prime Minister Viktor Orban ’s 16-year rule.
The forint this week touched the strongest level against the euro since 2023. The extra yield investors demand to hold Hungary’s dollar bonds instead of Treasuries has also shrunk by a hefty 75 basis points in the past year, within close reach of levels last seen in 2022.
After a selloff last month caused by war in the Middle East, investors piled back into forint assets in past days amid a fragile détente in Iran and as opinion polls showed Orban on the cusp of losing power to the Tisza party.
Investors are betting that a Tisza-led Hungary will mend relations with the European Union, put the $220 billion economy on track for an injection of funds frozen by the bloc and possibly even for euro adoption.
“Eurobonds stand to benefit from a Tisza victory as the expectation will be toward a quick resumption of EU funds, which would limit external issuance,” said Kaan Nazli , a portfolio manager and senior economist at Neuberger Berman Europe Ltd. Local debt and the forint should also gain, even though Iran war volatility may limit short-term upside, he said.
The forint slumped nearly 5% against the euro in the first days of the Iran war but has since made up nearly all of the losses. This shows Hungary’s continued appeal even as the fallout from the Middle East conflict is set to hit the land-locked energy importer harder than most developing nations.
The sovereign’s dollar-bond spread has narrowed to 126 basis points, compared with 200 basis points a year ago, according JPMorgan Chase & Co. indexes. Meanwhile, the yield on Hungary’s benchmark 10-year local-currency note has dropped more than 80 basis points since last month’s peak to around 6.6% on Friday.
Frantisek Taborsky , a strategist at ING Bank NV, said forint assets disconnected from regional peers and — to a degree — from global geopolitics, in the run-up to the vote.
“Market positioning before the general election is pushing EUR/HUF and bond yields significantly down,” he said.
Commerzbank AG economist Tatha Ghose said the forint may rally as far as 365 per euro after the election, compared with 377 on Friday, if Tisza delivers a clean victory at the polls and the Middle East stabilizes.
Market expectations for political change may have gone too far ahead of the vote, according to Barclays Plc strategists, including Marek Raczko , who don’t see value in holding forint longs going into Sunday’s ballot.
They see the forint at 370-375 per euro if Tisza win, while a surprise victory for Orban’s Fidesz party could send the currency weakening to 405-410. But the strategists cautioned against overreacting while the election outcome remains uncertain. Options imply only an 8.5% probability of the forint weakening above 405 in one month’s time, while Polymarket assigns a 28% chance to a Fidesz victory, signaling a disconnect in the market, Barclays said.
Orban has repeatedly showed that he can mobilize his base on election day, with a legal challenge or even unrest also representing a tailrisk going into Sunday.
The election rally took off from the second half of last year, when opinion polls started to show Tisza’s lead in opinion polls growing even as Orban ramped up his campaign efforts and loosened fiscal policy. The wagers, as well as Hungary’s high interest rates, helped the forint strengthen 7% against the euro and 21% versus the dollar during 2025.
Citigroup Inc. strategist Luis Costa said positioning in Hungarian assets has become “a lot cleaner and favorable” after the selloff triggered by the war in Iran. He recommends long positions in local bonds into the ballot, without currency hedges.
“A market-friendly election outcome may support convergence trades, especially if one takes into account the prospects for a medium to long term push to EU adoption by the potential new government,” Costa said.
