Central Europe’s currencies to back off highs in 2026: Reuters Poll

A Reuters poll of analysts shows Central European currencies may be near a ceiling after recent multi-month highs, with the Hungarian forint — the region's top performer in 2025 (+8% YTD) — forecast to weaken about 2.3% to 390.00 per euro over 12 months (current peak 380.35), and to about 385 by end-2025 per the 1-month median. The Czech crown is expected to remain the best performer, finishing around 24.1 per euro (near a 26-month high of 24.106), while the zloty is seen edging back to ~4.25 per euro and Romania’s leu declining ~1.1% to 5.1442 as central banks maintain a hawkish pause and currencies are supported by a softer dollar; analysts flag Hungary’s fiscal strains and a possible easing of geopolitical risk around Ukraine as key drivers for future moves.

Analysis

Market structure: Central Europe FX winners are the Czech koruna and, until signs reverse, currencies backed by hawkish central banks; losers are the Hungarian forint and Romanian leu where fiscal and election risks create asymmetric downside. Expect exporters in Hungary to get a short-term competitiveness boost if HUF weakens, while importers, domestic bondholders and foreign-currency borrowers face margin pressure; implied move size is modest (HUF ~2–3% vs EUR over 12 months) but meaningful for local equities and 2–5y sovereign spreads.

Risk assessment: Tail risks include a sudden ceasefire or escalation in Ukraine (±3–7% FX shock), Hungarian pre-election fiscal slippage (>3% GDP-funded fiscal loosening) and abrupt central bank pivots if CPI surprises; these would reprice FX and sovereign spreads in days-to-weeks. Hidden dependencies: FX intervention by the National Bank of Romania and MNB balance-sheet actions can cap moves for weeks; Fed/ECB differential and USD swings remain the dominant external driver over the next 3–12 months.

Trade implications: Tactical short-HUF (EUR/HUF long) and relative long-CZK vs HUF are the highest-probability plays for 3–12 month P&L, complemented by buying downside protection on Hungarian banks and sovereigns for 1–6 months. Use options to size convexity (buy calls on EUR/HUF or put spreads on OTP/ERSTE) rather than naked FX shorts given event risk; target asymmetric payoff with 1–4% NAVs per idea.

Contrarian angles: Consensus that HUF is overvalued may be underpricing continued hawkish MNB communication and capital inflows — if growth surprises re-emerge HUF could re-test 370s, so short-HUF should be sized and hedged. Conversely, the leu’s managed float suggests central bank resistance to sharp depreciation; a pure EUR/PLN or EUR/RON short without conviction risks policy intervention. Historical parallel: 2013–2016 CEE FX moves were often driven by politics, not fundamentals; treat 2025–26 election windows as liquidity traps.

Key Decisions for Investors

• Establish a tactical EUR/HUF long (short HUF) via 3-month forward or FX futures equal to 3% of NAV with target 390 in 9–12 months and hard stop at 375 (limit loss ~1–1.5% NAV). Rationale: Reuters poll expects ~2.3% depreciation and fiscal/election downside risk for HUF.
• Execute a pair trade: long CZK vs short HUF (e.g., short EUR/CZK and long EUR/HUF offset) sized 2% NAV, target ~6–8% relative outperformance in 3–12 months; trim if EUR/CZK >25 or EUR/HUF <378.
• Buy downside protection on Hungarian financials: purchase 3-month put spread on ERSTE.VI (or OTP.BU if accessible) sized 1–2% NAV (e.g., buy 15% OTM put / sell 25% OTM put). This hedges bank-equity losses if HUF falls >5% or sovereign spreads widen.
• Buy 3-month EUR/HUF call options (ATM-to-1.5% OTM) sized 1% NAV as convexity insurance ahead of winter election/fiscal announcements; exit or roll at 30–50% of premium decay or if EUR/HUF breaches 385.