Zloty seen leading gains as rate hikes support central European currencies - Reuters poll
Reuters
Published Nov 03, 2021 04:26AM ET
By Miroslava Krufova and Anita Komuves
PRAGUE/BUDAPEST (Reuters) - The Polish zloty and Hungarian forint will notch up strong gains against the euro over the next year as most central European currencies return to a path of appreciation, helped by expected rate hikes, a Reuters poll showed on Wednesday.
As inflation hits new highs in central Europe, more policy tightening is expected to lift regional currencies that had shed around 1% in the last month due to a stronger dollar.
"Generally over the next 12 months the zloty should be supported by a tightening of domestic monetary policy," said Krystian Jaworski, senior economist at Credit Agricole (OTC:CRARY) in Warsaw.
"Also the growth prospects should be quite good after this wave of the pandemic finishes."
The zloty was expected to firm 3.5% from Monday's closing levels over the next year, to 4.46 versus the euro.
Inflation data on Friday further fuelled Polish rate hike expectations as the CPI soared to an annual rate of 6.8%, and officials and analysts have said it could hit 8%.
The zloty has lagged its regional peers in 2021, with the Polish central bank the last in the region to begin lifting rates, taking a cautious approach until a surprise October hike. It is expected to tighten further at a meeting on Wednesday.
The Hungarian forint is seen firming 3% to 350 per euro in the next year, also supported by rate hikes that the National Bank of Hungary started in June.
"Even though the bank slowed the pace of its rate hikes to 15 basis points, the tightening cycle must have an effect on the forint sooner or later. The small steps add up," Gergely Suppan, an analyst at Takarekbank, said.
Meanwhile, the Czech crown, the region's best performer this year, is seen firming 2.3% over the next 12 months as markets price in 125 basis points in hikes for the rest of the year.
In Romania, where political uncertainty continues to cloud attempts to rein in twin deficits, the leu is projected to ease 1.0% in the next year to 4.997 versus the euro.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.