KBC Market Research Desk
KBC Bank
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Czech koruna weaker after disappointing GDP structure
NBP set to stay on hold
The CEE currencies have withstood pretty well ongoing Asian sell off so far. While Indian rupee and Turkish lira have lost more than 1.5% since Monday, the Central European losses range from-0.1 to -0.4%. The Czech koruna is somewhat weaker than other regional peers after the slightly disappointing structure of 2nd quarter GDP was released on Tuesday. The Czech recovery has still been driven mostly by exports and inventories. Domestic demand remains weak and hence interventions against the koruna will not be off the table at the September CNB Board meeting.
Today, the Polish MPC meeting is the main CEE event. We expect the “no change” verdict and neutral comments that should envisage a longer period of interest rate stability. The doves on the NBP Board seemed to be rather cautious after several encouraging reports has arrived, including stronger PMI a industrial output (at its 18-months high). Also the hawkish camp is relatively comfortable with the current monetary stance as inflation continues to stay well below the NBP target (1.1% y/y compared to the 2.5% target). We believe that the first interest rate hike in Poland does not come before 2014, when the inflation should climb back to the target and also domestic demand hopefully gets stronger.
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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