KBC Market Research Desk
KBC Bank
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The forint strengthens on Foreign minister’s verbal intervention and cautious talk from MNB vice president
The January Czech retail sales surprise on the upside
While the Polish zloty and the Czech koruna were barely changed on Wednesday, the forint slightly strengthened after Hungarian Foreign minister Martonyi said weaker forint is certainly not the government’s intention due to foreign-currency indebtedness of the country. The forint was also supported by a comment from Ádám Balog - newly appointed vice president of the central bank, who said that cautious and gradual interest rate cuts proved to be successful and there is no reason to change this policy. Still, due to recently undertaken measures (i.e., amendments of constitution) and uncertainty around future steps of the new MNB president Matolcsy, the forint has been the worst performing Central European currency so far this year (see the chart below).
Regarding the fresh figure on Czech retail sales for January, it surprised both us and the market on the upside. Still, it showed a modest decline and we continue to expect households’ consumption to fall by 0.4 % in 2013. As for the market impact, better retail sales slightly support the koruna which is currently trading at EUR/CZK 25.58.
Later today, the Polish statistical office will release inflation readings for February. We predict that Poland’s inflation fell to 1.5% y/y, albeit it was up by 0.2% m/m. We estimate that the month-on-month price rise was due in particular to the increases in food and soft drink prices. By contrast, clothing prices should seasonally fall for a second consecutive month, this time by 2.1%. Let us add that the complete structure of the January index, recalculated with newly weighted items in the consumer basket, will be released this month.
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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