Economic growth and stability in Central Europe is expected to continuing to lift the region's currencies, helping them overcome the prospect of economic slowdown in China and an increase in US interest rates. The eastern members of the European Union have weathered the shocks from China in past weeks, while currencies in other emerging markets weakened to multi-year lows.
A median forecast in a Reuters poll of 36 analysts showed on Thursday that the zloty is expected to lead regional currencies higher, gaining 4.1 percent against the euro in the next 12 months from its end-August level. The Czech crown is forecast to gain 2 percent, the forint 1.7 percent and the leu 0.8 percent.
All are forecast to strengthen in the next months except the crown. It has been trading for weeks near 27 to the euro, the cap on its value that the Czech central imposed in 2013 to fight the threat of deflation. The Czech central bank has pledged to maintain the cap. It bought an estimated 3 billion euros last month to keep the crown below its limit for the currency The past months' data showed that the Czechs had the steadiest recovery in the region, where economies are growing by 3 to 4 percent in annual terms, and despite some slowdown, China's problems have not darkened the outlook. The poll predicts that the crown will ease 0.3 percent to 27.1 against the euro in the next one to three months, but break through it to 26.5 by the end of August next year.
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