CEE FX: Higher rates seen cushioning currencies – ING
ING’s Frantisek Taborsky explains that a surge in energy prices, a jump in US 10-year yields to 5% and a stronger Dollar have hit CEE currencies and pushed local rates higher.
Higher energy prices, a surge in US 10-year yields to 5%, and a stronger US dollar have negatively impacted currencies in Central and Eastern Europe (CEE), according to Frantisek Taborsky of ING. These factors have led to higher local rates and weakened currencies across the CEE3 markets, with front-end markets pricing in an additional 10-20 basis points of rate hikes on average.
Despite the risk-off sentiment, higher front-end rates could cushion currencies against further losses and facilitate stabilization. Frantisek Taborsky maintains that EUR/CZK should approach the 24.300 level near the Czech National Bank's meeting, with upside potential if the central bank adopts a dovish tone. The EUR/PLN pair experienced the largest increase in the region yesterday, and the zloty may stabilize below 4.340 as the market processes dovish comments from the Polish Central Bank (NBP) following their decision.
EUR/HUF remains susceptible to gas price fluctuations and could rise further, potentially testing levels above 368, though support may not arrive until the next NBH meeting. The article highlights the ongoing impact of oil-driven inflation risks and Fed rate-hike expectations on the US Dollar, which continues to weigh on the AUD/USD, USD/JPY, and other currency pairs.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
