Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Few gains for central Europe's currencies in the coming year - Reuters poll

12/05/2019 | 02:14am EDT
A man holds new 100 and 200 euro banknotes with new security features during media event in Riga

Central Europe's main currencies will struggle to appreciate in the next year, with the Hungarian forint seen sticking near record lows and only the Czech crown expected to eke out small gains, a Reuters poll showed on Thursday.

Slowing growth is a large factor taking the shine off the region's currencies, which have already been battered much of the year by rising global risks like a hotter trade dispute between the United States and China, as well as Britain's still unclear departure from the European Union.

While Central European economies have held up well so far, they are starting to show the effects of a slowdown in western trading partners, notably Europe's main engine Germany.

Hungary's forint has also been hurt by the central bank's loose monetary policy stance as its interest rates are the lowest in the region.

The currency has lost over 3% since the start of the year and hit a record low to the euro in November.

Most analysts in a Reuters poll predicted the forint would cling to these levels over the next 12 months, avoiding the same depreciation trend seen this year.

The median poll forecast showed the currency losing around 1.1% from Wednesday's level to trade around 335 to the euro over the next 12 months.

"The currency which we are underweight on is the Hungarian forint...largely because we think the monetary policy is too loose for the deteriorating current account dynamics," ING chief FX strategist Petr Krpata said.

Romania's leu was also forecast to drop 1.5% to 4.85 per euro due to concerns over deficits in the country.

The Polish zloty, the region's most liquid currency, was seen nudging 0.5% lower to 4.30 to the euro, unchanged from the 12-month outlook in a poll a month ago.

Caution is still seen around the fate of Swiss franc mortgage loans and their impact on the banking sector.

The zloty weakened last week after a Polish Supreme Court verdict that investors fear raises the risk that Swiss franc mortgage loans will be converted into the local currency on terms unfavourable to banks.

"Macro data continue to point to a weakening of activity," Raiffeisen Bank wrote in a Dec. 3 FX outlook report.

"Another set of news regarding the CHF mortgage issue increased concerns about the negative impact on the banking sector... Given all of the above, EUR/PLN is likely to fluctuate above 4.30 in the near term."

Natixis strategist Nordine Naam said the current economic backdrop was negative short term but that slow recovery in growth starting next year could also boost currencies later.

Analysts also said the Czech crown still stood out. It was forecast, though, to gain 0.5% to 25.43 per euro in the next 12 months.

The Czech central bank remains one of the few in Europe still debating whether interest rates should rise further to battle inflationary pressures.

"Given the carry advantage, being short euro-long crown should give positive returns," said Krpata of ING, which has made the crown its top pick in the region.

By Jason Hovet and Miroslava Krufova


ę Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
BYD COMPANY LIMITED 9.48% 231 End-of-day quote.13.68%
EURO / HUNGARIAN FORINT (EUR/HUF) 0.33% 358.23 Delayed Quote.-0.63%
EURO / POLISH ZLOTY NEW (EUR/PLN) 0.15% 4.574 Delayed Quote.0.87%
ING GROEP N.V. -1.13% 10.838 Real-time Quote.43.54%
JASON CO., LTD. 0.37% 537 End-of-day quote.-19.61%
NATIXIS 0.03% 4.001 End-of-day quote.0.00%
RAIFFEISEN BANK INTERNATIONAL AG 3.88% 20.1 Delayed Quote.16.01%
SWISS RE LTD -0.94% 83.94 Delayed Quote.1.70%
US DOLLAR / HUNGARIAN FORINT (USD/HUF) 0.27% 301.27 Delayed Quote.2.44%
US DOLLAR / POLISH ZLOTY NEW (USD/PLN) 0.14% 3.8477 Delayed Quote.4.10%
Latest news "Economy & Forex"
03:45aS.Africa's Sibanye-Stillwater to buy French Eramet's Sandouville plant for $77 million
RE
03:45aAir France-KLM narrows quarterly losses as bookings begin recovery
RE
03:39aOil prices drop, but on track for weekly gain
RE
03:36aGold heads for best weekly gain in over 2 months on dovish Fed
RE
03:31aGlencore ups expectations for FY trading, lowers nickel, coal
RE
03:30aCineworld takes $200 million loan ahead of busy movie season
RE
03:24aNomura quarterly profit dives 66% on trading slowdown, Archegos hit
RE
03:18aNorth Korea's economy in crisis because of COVID-19, sanctions - South
RE
03:12aNatWest ramps up investor payouts as profits bounce back
RE
03:03aRIGHTMOVE : profit tops pre-pandemic levels on housing momentum
RE
Latest news "Economy & Forex"