KBC Market Research Desk
KBC Bank
The Central European currencies remained broadly stable on Friday. Among them, the Czech koruna showed the highest volatility, a rare phenomenon in the recent months. After the Czech statistical office had slightly improved its estimate of GDP growth in the last quarter of 2014, the koruna strengthened to nearly EUR/CZK 27.40. In contrast, a similar upward revision of the GDP growth estimate in Poland did not have a significant impact on the zloty. Increasing market focus on this week’s NBP meeting (a rate decision is due on Wednesday) may help explain the difference. Let us recall that besides their influence on the zloty, bright prospects of additional easing most likely supported Polish government bonds last week (10-year yield fell by 17 basis points last week).
Regarding fresh regional PMI data, the Polish index surprised on the upside, while the Czech index remained more or less in line with market consensus. Both indices slightly declined compared to January but stayed safely above the key 50- points level and close to their respective multi-month high. The indices therefore still signal improvement in conditions in manufacturing. Good news namely is that new orders as well as employment improved again in February. The latter finding signals that household’s consumption may be also in the future among key drivers of economic growth both in Poland and the Czech Republic.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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