Next report will be published on 12th of July
Headlines
The Romanian leu near all time lows on political woes
The Czech Flash further deteriorates
Most of the CEE currencies were strengthening yesterday despite a new (possible) source of regional contagion. The Romanian Parliament suspended powers of President Traian Basescu and set the stage for an impeachment referendum. Facing huge political uncertainty - the Romanian leu remained under pressure slipping to all time lows. It is important to note that the EU may find Romanian steps against its laws and it can halt the IMF/EU bailout programme. Today, the Constitutional court should rule out on a law that would relax the impeachment requirements.
In the Czech Republic, the first estimate of the June Czech Flash (our leading indicator) confirms the gathering clouds over the Czech industry. The Flash recorded a drop to 1.07 and at the same time the figures for the past three months were revised downwards once again. The Flash has thus now been falling for the fourth consecutive month. Not even a look at the structure of the Flash gives rise to much hope. Although there was a slight improvement in external orders sub-index within the PMI, all other components are worsening. The uncertainty in the Eurozone is thus still tying the hands of Czech industry. The Flash shows that the outlook for the next 3 to 4 months is not at all favourable. Yet we are still far from the pessimism we witnessed at the end of 2008 and early 2009.
| Currencies | % chng | |
| EUR/CZK | 25.44 | -0.9 |
| EUR/HUF | 288.0 | -0.4 |
| EUR/PLN | 4.22 | -0.6 |
| EUR/USD | 1.23 | 0.3 |
| EUR/CHF | 1.20 | 0.0 |
| FRA 3x6 | % | bps chng |
| CZK | 0.98 | 0 |
| HUF | 7.17 | 0 |
| PLN | 5.09 | -2 |
| EUR | 0.46 | 2 |
| GB | % | bps chng |
| Czech Rep. 10Y | 2.84 | -4 |
| Hungary 10Y | 8.02 | 5 |
| Poland 10Y | 5.13 | -3 |
| Slovakia 9Y | 5.94 | 5 |
| CDS 5Y | % | bps chng |
| Czech Rep. | 132 | 0 |
| Hungary | 507 | 6 |
| Poland | 221 | 0 |
| Slovakia | 244 | 0 |
