CEE currencies seem to have somewhat recovered from the shock of the election of Donald Trump as the president of the US.
Both the Polish zloty and Hungarian forint have gained since early December, after sliding for roughly a month before that.
Going forward, however, it is hard to see further gains in both the Polish zloty and Hungarian forint. As for the former, the worsened economic outlook could speak against currency strength, while policy uncertainty could also weigh on Poland. As for the forint, central bank actions could be more at play.
An increasingly important topic is the situation on the CZK market. Increasing inflation triggered another wave of inflows at the beginning of 2017 to the Czech market. We now expect the koruna cap regime (which keeps the EURCZK rate above 27) to be abandoned in 2Q17, with risks tilted toward an even earlier exit.
For a more detailed analysis on all currencies in the CEE region that we cover, click on the link for the pdf below.
More on: FX News CEE 13-january