Geopolitical Risk Has Started To Materialize

HUNGARY - Report 04 Sep 2014 by Istvan Racz

Executive Summary

As the war in eastern Ukraine was clearly escalating, the forint came under more pressure in recent weeks, its weakening fostered by low domestic interest rates and the central bank’s endeavor to get rid of its non-resident depositors. However, HUF weakness remains measured, as a result of a healthy balance of payments, plus the fact that global financial markets have avoided a major correction so far.

The situation regarding the Ukraine/Russia conflict appears very fluid, and most recent developments strongly suggest that further aggravation is still ...

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