CE currencies recover after the Brexit shock
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Polish FinMin says no FX interventions planned
CE currencies recover after the Brexit shock
The Central European currencies benefited from better mood and slightly strengthened on Tuesday. The focus however still remains on political factors, namely on talks of EU politicians about the Union in post-Brexit era. It seems that uncertainty remains quite high which should in our view put a cap on prospective gains of the forint and (particularly) the zloty, at least in the shortterm. Polish finance minister Szalamacha reiterated yesterday that the ministry planned no FX interventions to support the zloty and added that he saw the currency to return to pre-Brexit levels (he nevertheless provided no specific horizon).
Regarding government bond yields (10Y), they already have fully recovered from the Brexit shock and for example the Polish yield is even seen at the lowest level since mid May.
As for the rest of the week, the eye-catcher is a meeting of the Czech National Bank. It will be interesting to see how sensitive the Czech central bank currently is to negative risks stemming from the Brexit.
| Currencies | % chng | |
| EUR/CZK | 27.12 | 0.0 |
| EUR/HUF | 316.4 | -0.4 |
| EUR/PLN | 4.42 | -0.9 |
| EUR/USD | 1.11 | 0.4 |
| EUR/CHF | 1.09 | 0.8 |
| FRA 3x6 | % | bps chng |
| CZK | 0.26 | 0 |
| HUF | 0.90 | -1 |
| PLN | 1.67 | -5 |
| EUR | -0.33 | -1 |
| GB | % | bps chng |
| Czech Rep. 10Y | 0.49 | 0 |
| Hungary 10Y | 3.22 | -10 |
| Poland 10Y | 3.02 | -4 |
| Slovakia 10Y | 0.70 | 0 |
| CDS 5Y | % | bps chng |
| Czech Rep. | 44 | 0 |
| Hungary | 178 | -10 |
| Poland | 105 | 0 |
| Slovakia | 44 | 0 |
Author
KBC Market Research Desk
KBC Bank
