The Czech crown will continue strengthening and in 12 months will be at levels not seen since late 2012, propelled by expectations for tighter monetary supply, a Reuters poll predicted. Last year the crown and Poland's zloty were some of the world's top-performing currencies, gaining about 5 percent against the euro and around 20 percent versus the dollar.
By the end of January 2019, you will need only 24.80 crowns to buy a euro, 1.7 percent fewer than now, according to the poll of analysts and foreign exchange strategists taken in the past week. That compares to forecasts published by the Czech National Bank last week for the exchange rate to be at 24.9 per euro this year and 24.5 next. This was the first time the CNB has given its euro projections since 2013.
"You have two possibilities - either the Czech crown strengthens spontaneously, supported by the developments in the economy, or if the spontaneous exchange rate development is not enough for the CNB then it will be increasing interest rates more than it currently predicts," said Radomir Jac of Generali CEE.
The Czech central bank has raised rates three times since last August after nearly five years of ultra-loose policy, and is expected to follow up on last week's hike with two more this year.
In contrast, the European Central Bank is not expected to increase its main refinancing rate until the second half of next year, a Reuters poll found last month.
Poland's currency will firm 1.0 percent against the euro from Wednesday's level in the coming year, reaching 4.12 per euro by end-January, the poll found. That comes even though the central bank is not expected to raise interest rates from a current record low until early 2019.
"Appreciation of the zloty is expected to resume later in Q1 2018, reflecting the strong domestic macro story," said Peter Virovacz at ING.
Budapest is home to Central Europe's most dovish central bank and any gains by Hungary's forint probably won't be realised until later this year. It will be a more modest winner, expected to strengthen 0.2 percent to 309.0 per euro over the next 12 months.
Both Romania's leu and Serbia's dinar are predicted to be a touch weaker in a year, down 0.2 and 0.7 percent respectively, at 4.66 and 119.45 per euro.