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Investing.com -- The Dollar moved stronger on Monday as energy prices climbed and equities sold off following weekend developments, according to Goldman Sachs.
The price action appeared less risk-driven and more influenced by relative terms of trade shifts, with Norwegian krone and Canadian dollar showing outperformance while the Euro and Japanese yen underperformed within G10 currencies. South African rand and Indian rupee also showed movement within emerging markets.
Hungarian forint stood out among energy importers following the weekend’s election results. The opposition won the parliamentary elections with Tisza securing a two-thirds super-majority in parliament. This majority gives the party the ability to pass legislation that aligns with the EU’s super milestones to unblock EU funds and paves the way for Euro adoption.
Goldman Sachs expects the clearer path to economic policy changes to support sustained forint appreciation, with the currency benefitting from a decline in risk premium and improving growth and external balance outcomes.
For Hungary’s external balances, higher energy prices remain a vulnerability as oil and natural gas imports make up the majority of the country’s energy trade balance. Goldman estimates that current oil and gas price levels, with Brent at $103 per barrel and European natural gas at EUR48 per megawatt-hour, point to a decline in the net energy balance of around 1.3 percentage points relative to 2025.
However, the disbursement of EU funds would more than offset this impact. The Recovery and Resilience Facility funds include grants worth 3% of 2025 GDP and loans worth 1.8%, while the 2021-2027 EU budget funds should amount to around 2.5% of GDP per year if disbursed regularly.
Goldman Sachs noted that FX markets took longer to fully account for economic fallout in the 2022 shock compared to the effect on broader risk sentiment and volatility. The firm remains bearish on Philippine peso, Thai baht and Indian rupee given their exposure to energy imports and weak external balance and growth outlook.
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