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The zloty hits a one-month low against the euro
CNB minutes: no need for negative rates
Yesterday, the Polish zloty again underperformed its peers and weakened to a new one-month low against the euro. Both slightly lower inflation and much weaker than expected PMI have probably contributed to the depreciation. Besides that, upcoming parliamentary elections in Poland may also have had an adverse effect on the zloty which lost about one percent against the euro over the last four weeks.
According to minutes of the last meeting of the Czech National Bank (CNB), the bank’s board did not consider cutting interest rates below zero. The minutes said that “there was no need for such a step given the negative market interest rates in some financial market segments and the high credit growth”. As for the possible extension of the intervention regime, the minutes unveiled that the board preferred to postpone any decision in this respect until it would be able to assess pro-inflationary pressures emerging in the domestic economy (admitting, at the same time, that the pressures may not be as strong as predicted). We still keep our base case unchanged and expect the exit in the second half of 2016. The risks for the extension, however, have been rather rising.
| Currencies | % chng | |
| EUR/CZK | 27.13 | -0.1 |
| EUR/HUF | 312.6 | -0.2 |
| EUR/PLN | 4.25 | 0.0 |
| EUR/USD | 1.12 | 0.2 |
| EUR/CHF | 1.09 | 0.6 |
| FRA 3x6 | % | bps chng |
| CZK | 0.26 | 0 |
| HUF | 1.33 | 3 |
| PLN | 1.69 | -2 |
| EUR | -0.05 | 0 |
| GB | % | bps chng |
| Czech Rep. 10Y | 0.66 | -3 |
| Hungary 10Y | 3.35 | -1 |
| Poland 10Y | 2.77 | -8 |
| Slovakia 10Y | 0.88 | 0 |
| CDS 5Y | % | bps chng |
| Czech Rep. | 51 | 2 |
| Hungary | 168 | -4 |
| Poland | 76 | 0 |
| Slovakia | 52 | 2 |
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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