CEE FX: Why are a strong dollar and an energy rebound weighing on currencies? – ING

Central and Eastern European currencies are under pressure from higher global energy prices and a firmer Dollar, according to ING strategist Frantisek Taborsky. With EUR/PLN trading near 4.420, EUR/CZK has climbed to its highest level since mid-October, while EUR/HUF stands above 365. Ahead of local GDP releases and CNB minutes, ING retains its bearish stance on CEE FX and expects further losses for regional currencies as markets take their cues from broader global developments.

What Is Driving Renewed Downside Pressure on Regional Currencies?

"Following a rebound in global energy prices, we observed a rise in rates across the CZK and HUF markets, roughly 5-8bp along the entire curve. At the same time, CEE FX has come under renewed pressure due to energy prices and the US dollar reaching new highs."

"EUR/PLN has returned to near its local high of around 4.420. EUR/CZK has reached its highest levels since mid-October, and EUR/HUF has moved above 365."

"This aligns with our bearish view on CEE FX, and we maintain this bias."

"Until then, however, the direction remains unchanged, and we may see further downside for CEE currencies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)