The weakening of the forint can be led back to several reasons, head of ING forex division Miklós Kolba told online portal Origo. The first comments of foreign investors suggest that the markets take the reform package negatively, he said. “Firstly, the package includes items of income that appear unsecured and the expenditure cut is not brave enough. Investors consider that the package lays out only short term goals and they do not see the fundaments of long term sustainability,” Kolba said.
The other main reason of the weakening of the Hungarian currency is the natural reaction of the markets. “Due to the positive expectations prior to the reforms, investors were pushing down the currency. But after the announcement of the package, there is nothing to wait for so the profit realization immediately started, weakens forint,” he added.
Also, the Budapest Stock Exchange’s blue-chip BUX index was down 1.72% at noon after National Economy Minister György Matolcsy announced that the government would not reduce the extraordinary financial sector levy in 2012. The emergence of news that drug subsidies may decline as part of its debt/reduction program also impacted trade of BSE heavyweights OTP bank and drug company Richter. The BUX commenced afternoon trade down 398.16 points at 22,757.34 on a heavy composite exchange turnover of HUF 13.16 billion. At Tuesday noon OTP was down 3.23% at HUF 5,690 on an exchange-high turnover of HUF 9.17 billion; Richter was down 1.76% at HUF 37,300 on a turnover of HUF 1.11 billion; Oil and gas company MOL was down 0.84% at HUF 23,600 on a turnover of HUF 1.94 billion; Magyar Telekom was up 1.09% at HUF 557 on a turnover of HUF 422 million. Papers of pharma company Egis also posted a 5.8% loss after the reforms had been announced.
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