Central European Daily

While the CNB Board meeting brought virtually no market impulses for the Czech currency, it might be the ECB, which bring a wind of change to the market. Core markets have began to bet on further ECB easing and these hopes bring fresh support for all currencies in Central Europe. As a result the koruna has reached two-weeks highs, while the zloty and the forint are attacking one-month highs. Nevertheless in the case of the forint there was one additional factor, which brought the currency to higher levels. The S&P rating agency changed Hungary’s outlook from negative to stable, but the rating remained unchanged at BB level. Hungary’s rating is one notch better (BB+) at the other two big rating agencies. The main reasons behind the improvement are the below 3% of GDP budget deficit and the government’s commitment to the tight fiscal policy, the decreasing external debt, stable export performance, improving growth outlook (they increased the GDP growth forecast from 1.3% Y/Y to 1.8% Y/Y for both 2014 and 2015) and the shift towards to local currency and domestic driven refinancing of public debt.