The pengő (; sometimes written as pengo or pengoe in English) was the currency of Hungary between 1 January 1927, when it replaced the korona, and 31 July 1946, when it was replaced by the forint. The pengő was subdivided into 100 fillér. Although the introduction of the pengő was part of a post-World War I stabilisation program, the currency survived for only 20 years and experienced the most serious case of hyperinflation ever recorded.
Name
The Hungarian participle pengő means 'ringing' (which in turn derives from the verb peng, an onomatopoeic word equivalent to English 'ring') and was used from the 15th to the 17th century to refer to silver coins making a ringing sound when struck on a hard surface, thus indicating their precious metal content. (The onomatopoeic word used for gold coins is csengő, an equivalent of English 'clinking' meaning a sharper sound; the participle used for copper coins is kongó meaning a deep pealing sound.) After the introduction of paper money of the Austro-Hungarian gulden () in Hungary, the term pengő forint was used to refer to forint coins literally meaning 'ringing forint', figuratively meaning 'silver forint' or 'hard currency'.
At the beginning of the First World War precious metal coins were recalled from circulation, and in the early 1920s all coins disappeared because of the heavy inflation of the Hungarian korona. The name pengő was probably chosen to suggest stability. However, there was some controversy when choosing the name of the new currency, though the majority agreed that a Hungarian name should be chosen. Proposals included turul (a bird from Hungarian mythology), turán (from the geographical name and ideological term Turan), libertás (the colloquial name of the poltura coins issued by Francis II Rákóczi), and máriás (the colloquial name of coins depicting Mary, patroness of Hungary).
The denomination of the banknotes was indicated in the languages of ethnicities living in the territory of Hungary. The name of the currency was translated as follows: Pengö ( Pengö) in German, pengő ( pengi) in Slovak, пенгов ( пенгова) in Cyrillic script Serbo-Croatian, пенгыв ( пенгывов, later пенге) in Rusyn, and pengő ( pengei, later penghei) in Romanian. Later pengov ( pengova), the Latin script Serbo-Croatian version was also added.
The symbol of the pengő was a capital P placed after the numerals and it was divided into 100 fillér (symbol: f.).
History
Introduction of the pengő
After the First World War, according to article 206 of the Treaty of Saint-Germain, the Austro-Hungarian Bank had to be liquidated and the Austro-Hungarian krone had to be replaced with a different currency, which in the case of Hungary was the Hungarian korona. This currency suffered a high rate of inflation during the early 1920s. A stabilisation program covered by a League of Nations loan helped bring down inflation, and the korona was replaced on 1 January 1927 by a new currency, the pengő, which was introduced by Act XXXV of 1925. It was valued at 12,500 korona, and defined as 3,800 to one kilogram of fine gold – which meant that the pengő was pegged to the gold standard, but was not convertible to gold. In the beginning the cover ratio (which included gold and – up to 50% – foreign exchange) was fixed at 20%, but this had to be raised to 33.3% within five years. This goal was reached quickly: the cover ratio was 51% on 31 July 1930. Later it decreased somewhat due to the economic and financial crisis caused by the Great Depression. Until then the pengő was the most stable currency of the region.
After the Great Depression
The effects of the Great Depression reached Hungary after 1930, with agriculture being affected the most. The pengő had to be devalued, and the country's debt increased. After a short period of recovery, war preparations – the most important of which was the Győr Program – had loosened the country's financial and monetary discipline, which in turn led to the depreciation of the pengő currency. The territories given back to Hungary by the First and Second Vienna Awards in 1938 and 1940 were economically less developed; this was an additional factor which aggravated the country's economic situation.