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Central European Weekly
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Inflation Continues to Rise
Tue, Jul 22 2008, 12:24 GMT
by KBC Market Research Desk
Czech Republic
EUR/CZK breaks below the 23.0 level
Hungary
NBH leaves rates on hold and puts risks to both sides around inflation
Poland
The risk of second-round effects still a major obstacle on the road to lower rates…
Slovakia
Inflation Continues to Rise
The Week Ahead
Very thin calendar
Overview
Central European currencies enjoy strong money inflows
Central European currencies are strengthening significantly, with no correction on the horizon yet. The exchange rates of the regional currencies are being driven to recordbreaking levels by foreign investors, for whom those currencies have become a safe harbour at the time of high volatility on leading markets, which are affected by a simultaneous fear of a downswing of the U.S. economy and of increased global inflationary risks. The inflows in CE Fx markets are primarily short-term investments in short-term money market instruments. This applies to the koruna and the zloty in particular. As far as the forint is concerned, at least some foreign investors have picked government bonds as the destination for their investments.
While the strong koruna is a blessing for importers and tourists who travel abroad, the ever stronger Czech currency is increasingly becoming a burden for exporters that reduces their profit margins with some exporters trying to transfer the FX risk onto domestic suppliers. Too rapid an appreciation, as we can see, is not affecting the ‘big’ economic figures yet and is unlikely to show up soon. Hence we can hardly rely on surprisingly worse eco data to trigger a sale of the local currency, the result of which would be the start of a much expected correction of currencies. Concluding, the a further appreciation of those currencies, whose full impact on the economy will make itself felt after some time, still appears to be the risk for the near future.
Published on Wed, Jul 23 2008, 11:17 GMT
Archive
- CNB Board members play with words
Published On Tue, Nov 24 2009, 05:48 GMT - Polish industrial output in focus
Published On Mon, Nov 16 2009, 12:05 GMT - Polish inflation in the focus this week
Published On Mon, Nov 9 2009, 12:27 GMT - Polish central bank shifts to a neutral mode
Published On Mon, Nov 2 2009, 12:50 GMT - Surprisingly strong industrial output helps the zloty
Published On Mon, Oct 26 2009, 13:41 GMT
KBC Bank
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