The CEE currencies ended the last week relatively unchanged, shrugging off the geopolitical tensions in Israel, Iraq as well as in Ukraine. Not even the possibility of extension of sanction against Russia weighed on the region.
While the regional calendar is thin in the first half of this week, it is quite wellfilled in the second one. On Thursday, the CNB will conclude its rate-setting meeting. We believe that a new inflation forecast is likely to postpone the exit from the intervention regime, which has already been signalled by several board members. It should therefore not come as a great surprise. All in all, the new forecast should be closer to the market view as well as to our expectations of a later departure from the exchange rate regime and even later commencement of monetary tightening (using conventional measures). Markets will also watch releases of PMIs in the Czech Republic, Poland as well as in Hungary scheduled for Friday.
As for global factors - this week represented mainly by releases of U.S. macroeconomic statistics - they might play rather in favour of the US dollar and consequently might weigh on emerging markets, including the CEE region. Recent experience however suggests that the negative impact should be rather small.
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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