Central European currencies are expected to weaken over the next 12 months with the Polish zloty taking the biggest hit, a Reuters poll showed, as higher inflation compared to the euro zone and the prospect of interest rate cuts weigh.
The region’s currencies have made a strong start to the year, supported by high interest rates and easing energy prices that have taken pressure off trade balances.
But with Hungary’s central bank having already started to loosen policy and more rate cuts predicted in the region this year, analysts expect currencies to fall.
In Poland, where markets think the cost of credit will fall in the fourth quarter, the zloty is expected to weaken 2.7% compared to Tuesday’s European close to 4.55 versus the euro.
“I think the market could be underestimating the length of the economic slowdown the CEE economies will suffer and we will probably have some talk about interest rate cuts, so amid high inflation this will weigh on the CEE currencies,” Ipopema Securities economist Marcin Sulewski said.
The National Bank of Hungary (NBH) has already cut its key one-day deposit rate by a total of 200 basis points to 16% to ease the burden on the stagnating economy. Inflation, which remains the highest in the European Union, has started to ease.
“HUF has the potential to weaken if we see stronger-than-expected disinflation, possibly resulting in increased bets on more aggressive NBH easing,” said ING economist Peter Virovacz.
The forint is expected to fall 1.3% to 380.0 against the euro, according to the poll. The Romanian leu, tightly controlled by the central bank, is seen falling 1.0% to 5.0 versus the euro
“In Romania, the new government decided to deploy a new tool to limit still substantial prices pressures related to expensive food,” Generali Investments analyst Jakub Kratky said.
“Although consumer prices in Romania are largely sensitive to the exchange rate, it could soon allow the central bank to let leu depreciate slightly.”
The Czech crown is forecast to weaken the least of the region’s currencies, falling 0.1% to 23.775.
Source: https://www.investing.com/news/economy/cee-fx-set-to-weaken-as-rate-cuts-come-into-view-reuters-poll-3120348
The White House on Thursday said Nippon Steel Corp’s $14.9 billion proposed acquisition of U.S. Steel Corp deserves “serious scrutiny,” given the company’s core role in U.S. steel production that is critical to national security. In its first substantive statement on the deal, the White House said it viewed a strong domestic steel industry as […]
The angular, polarizing design of the Cybertruck will help boost the Tesla (NASDAQ:TSLA) brand, the electric vehicle maker’s chief designer said on Thursday, adding that the pickup was no experiment. “Love it or hate it, it’s a conversation starter, and it gets people talking about the brand,” Tesla Chief Designer Franz von Holzhausen said at […]
Boeing (NYSE:BA)’s first direct delivery of a 787 Dreamliner to China since 2019 is set to land in Shanghai on Friday, a step that could hasten the end of China’s freeze on deliveries of the firm’s profitable 737 MAX after more than four years. Privately owned Chinese carrier Juneyao Airlines on Thursday took delivery of […]