Daily Times

BUDAPEST: Central Europe’s main currencies are expected to strengthen in the next 12 months on the back of healthy economic growth and expectations for monetary tightening, a Reuters poll of analysts showed in Wednesday.

According to the March 2-6 poll, the Czech crown will gain 2.3 percent against the euro in the next 12 months relative to Monday’s close, to 24.85, which would be its strongest level since 2012.

Its strengthening is fuelled by expectations that the Czech central bank will continue to increase interest rates to fight inflation, analysts said.

The forint is expected to firm 2.2 percent to 307.5 by the end of February next year, and the zloty 1.2 percent to 4.14.

In past weeks, the Polish and the Hungarian units traded near their weakest levels this year as global markets were gripped by risk aversion due to inflation fears, before a rebound this week.

Unlike its Czech peer, the Polish central bank has not been worried over inflation.

It is expected to keep interest rates on hold at its meeting on Wednesday, and its updated economic forecasts are seen confirming that robust growth is coupled with moderate inflation.

“The… meeting should thus have little impact on the zloty,” Erste analysts said in a note, adding though that “the recent acceleration of wage growth should turn into demand pressure sooner or later, pushing the inflation rate up slightly in mid-2018”.

The bank is expected to start to lift rates next year.

Published in Daily Times, March 8^th 2018.