Protests in Ukraine and related threat of default might
bring contagion to some parts of Eastern Europe
Although Czech, Polish as well as Hungarian PMI yesterday showed better than expected results, it didn’t provide enough stimuli for the currencies to recover. The only currency that has profited from the nice PMI was initially the zloty, nevertheless the polish currency wiped out all its gains till the end of the session. The Czech koruna is currently under the pressure mainly due to bets on the change of the target exchange rate and lost 0.5 % yesterday, ending the session at 27.46 EUR/CZK. In Hungary the forint is weakened by fears of further easing of monetary policy. The NBH has more than halved its base rate from August and dovish stance after the last rate-setting meeting made markets jittery how far the NBH might go with rate cuts. The forint last week broke through psychological barrier at 300 EUR/HUF, which facilitated further easing. Yesterday, the forint hit its 8-month lows.
Read the full report: FX Daily
KBC