Forint dips to 320 per euro on U.K. vote; analyst blames jitters

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After U.K. voters chose to leave the European Union, the Hungarian forint dropped about 2.5% in value compared to yesterday and was trading around 320 the euro this morning. But the drop in the forint is due to insecurity of investors rather than any real economic changes, an analyst told the Budapest Business Journal this morning.

“Currently the forint is not weakening due to any negative economic effect, but in this insecure situation, investors are avoiding risks and radically lowering the emerging market dependence, as well as risky stock positions,” Mónika Kiss, an Equilor analyst, told the BBJ this morning.

She emphasized that the forint’s softening is due to market trading positions and not due to a change in the macroeconomic environment.

Although there are expectations of negative impacts from the long-term effect of the Brexit on Central European markets, the outcome of the vote in terms of economy can difficult to model, according to Kiss.

“The first political steps after the Brexit will be made in the first two years, and over the time the picture will get clearer,” Kiss said, in explaining how the economy of the region can be affected by the vote.

“Currently the Hungarian government expects a 0.3-0.4% percent slowing to the country’s GDP due to the vote,” the analyst said. She noted that the U.K. leaving the EU as a net payer to the common fund will have a bigger effect on the economy than the potential loss in trade.

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