Central European currencies are expected to mostly retreat in the next six months as the US Federal Reserve moves closer to lifting interest rates, a Reuters poll showed on Thursday. Some of the region's central banks are also likely to act to stop or reverse a strengthening of their currencies in order to boost inflation from levels around zero, and help economic growth.
The European Central Bank's asset purchase programme, launched last month, has depressed the euro and lifted central European currencies. Economic growth rates around 3 percent, robust payment and trade accounts, debt yields above euro zone levels and hopes for credit rating upgrades have also driven the region's currencies higher.
But once the timing of a US rate hike becomes much clearer, Europe's emerging markets will become relatively less attractive.
The Polish zloty and the Hungarian forint hit multi-year highs against the euro this week, but wobbles in currencies and bonds in recent weeks indicated that some investors already see the end of the regional gains.
According to the poll of 32 analysts, taken April 3-9, the forint could ease by 1.8 percent against the euro from Wednesday's close by the end of June to 302.5.
The zloty could also weaken by 1.8 percent to 4.09.
The two currencies have outperformed their regional peers this year, gaining about 6.5 percent against the euro.
However, Hungary's central bank is expected to cut its base rate again in the next few months, potentially putting pressure on the forint. And while Poland has signalled it has finished easing policy, analysts say it may yet have to cut rates again as the central bank is uncomfortable with a firming zloty, which hurts exporters.
David Marek, chief economist at Deloitte Advisory s.r.o in Prague, said the bank could try to stem a zloty rise with verbal intervention.
Others, like Damian Rosinski, Warsaw-based chief economist of Dom Maklerski AFS, believe that US rate hikes later this year will solve the problem for the Polish central bank, weakening the zloty against both the dollar and the euro.
"No local central bank actions (are) expected, only sheer market forces," he said.
The Romanian leu is set to ease 1.2 percent in the next three months to 4.45 versus the euro, the poll forecast.
It is hovering near 4.4 against the euro, a level beyond which the Romanian central bank may intervene to weaken it.
The Czech crown has approached 27, the cap introduced by the central bank in 2013. It is set to be relatively flat over the next six months at around 27.475, but some analysts think investors may push it to the central bank's cap at 27 within the next 12 months.
"Nevertheless, we do not expect any additional measures from CNB (central bank), just buying euros for CZK at level EURCZK 27.0," said Jan Vejmelek, chief economist of Komercni banka in Prague.