Six months after Slovakia joined the euro, the government is investigating why its citizens are doing their shopping in Hungary.
The forint’s 14 percent decline against the single currency in a year is sending Slovaks across their borders to buy cars, appliances and food that is as much as one-third cheaper.
There are stories that some shops in Hungary see as much as 1/3 of license plates coming from Slovakian drivers.
This is contributing to much weaker sales for many retail shops and business owners in the two Eastern European countries. In Slovenia, the decline in May stood at 13.4% while it was at 9.2% for Slovakia; Hungary’s retail sales were more than half of the latter. While the adoption of the euro promises a lot of good things in the long-run, those who rely on the currency for survival have yet to surpass the challenge they are facing at the moment. People can only take comfort from the fact that weakness of their local currencies at the moment would mean better exports for them and currency strategists are seeing appreciation for them in the long-run.
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