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Central European Weekly
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The koruna fights back
Mon, Nov 3 2008, 12:52 GMT
by KBC Market Research Desk
Czech Republic
The koruna fights back
Hungary
€20bn rescue package from international institutions saves Hungarian markets
Poland
Rate cuts on the horizon despite the ultra-conservative staff inflation projection
Slovakia
The Central Bank cuts rates by 50 bps
The Week Ahead
Czech central bank will cut rates by just 25 bps, but dovish comments are expected
Overview
Extreme volatility hits Central Europe too
Even true veterans of trading in financial markets do not remember such volatility in Central Europe. Certain fluctuations are almost unbelievable for most traders. The Czech koruna, for instance, firmed by nearly 10% in a single week, which in the past would be a huge change even on a year-on-year basis; and it follow a similarly rapid depreciation in early October. The other Central European currencies are experiencing a similar rodeo.
Of course, the primary reason behind this exceptional volatility is the situation in global markets that has led to such enormous volatility in practically all forex, stock, and bond markets. So, the VIX (Chicago Board Options Exchange Volatility Index, a measure of the implied volatility of the S&P 500) set all-time highs. Also, a decline in liquidity is evident in Central European forex markets, as cautiousness increases. The shallow market thus allows even small orders to stir the market significantly. A specific feature of recent weeks has been the story of the crisis and subsequent bailout of the Hungarian forint, which helped stir the whole region to the current volatility.
Calmer times may not yet be on the agenda, as serious events are scheduled for this week – Tuesday’s election in the United States, a rate cut by 50 bps in the Eurozone and the United Kingdom, and 25 bps in the Czech Republic, while the key statistics of the U.S. labour market will be released at the end of the week. Hence we may again be in for rapid moves in all directions.
Published on Mon, Nov 3 2008, 12:57 GMT
Archive
- 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 - EUR/PLN still hovers around the 4.2 figure
Published On Mon, Oct 19 2009, 10:39 GMT
KBC Bank
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http://www.kbc.be/dealingroom | piet.lammens@kbc.be
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