The crown could lead a firming of currencies in the European Union's eastern wing in the next year, helped by the Czech central bank's (CNB) tightening of monetary conditions, a Reuters poll showed on Thursday. The median forecast in the November 6-8 survey of 37 analysts showed the crown gaining 1.6 percent against the euro in the next 12 months, relative to Tuesday's close, while Hungary's forint was seen firming 1.4 percent in the same period.
The Polish zloty and Romania's leu could also firm, though by less than one percentage point, while Serbia's dinar could shed 1.4 percent in the next 12 months. Overall, the currencies are supported by the region's solid economic growth and expectations for rising interest rates. Since last month's poll, they have also drawn support from the European Central Bank's decision to extend its asset buying, albeit at a reduced pace.
The crown has additionally been buoyed by expectations for further rate hikes by the CNB, which last week increased borrowing costs for the second time since August against a backdrop of strong economic growth and fast-rising wages. Its cautious guidance knocked the crown off 4-year highs, but the rate hike expectations are seen bolstering the Czech currency again. The median forecast sees the crown firming to 25.165 against the euro in the next 12 months. That is a stronger level than the 25.5 projected in a survey a month ago.
The forint could firm to 307.33 on the back of Hungary's robust trade surplus, the Reuters poll showed. The 12-month forecast stood at 306 in October, but since then Hungary's central bank has confirmed its readiness to ease monetary conditions further, and new measures are possible at its meeting later this month, analysts said. The leu is expected to hover near 4.6 against the euro in the next year despite its fall on Tuesday to 4.64, its weakest level in more than five years, after Romania's central bank signalled a looser grip on the exchange rate.
The bank is seen starting to increase interest rates next year. "The current depreciation may be only short-lived," said Jakub Kratky, analyst of Generali Investments CEE, adding that uncertainty over a rise in the budget deficit and Romanian politics would limit any leu gains. The poll median sees the zloty firming to 4.21 versus the euro in the next 12 months, compared with 4.17 projected a month ago.
Nordea said in a note that tension between Warsaw and Brussels over Poland's controversial judiciary reforms could still weigh on the zloty. "(But) the economy is strong and should gradually lead to PLN strengthening in the medium term," the note said.
Comments
Comments are closed.