CEE FX: Rating downgrade adds to regional FX pressure – ING
ING strategist Frantisek Taborsky says Moody’s downgrade of Poland to A3 adds to pressure on CEE assets at the start of a relatively quiet second half of the month.
ING strategist Frantisek Taborsky notes that Moody's downgrade of Poland to A3 heightens pressure on CEE assets as the second half of the month begins relatively quietly. The region faces challenges from high energy prices, a stronger US Dollar, and limited progress in the US-Iran conflict, leading ING to maintain a bearish view on CEE currencies.
ING believes EUR/CZK fair value is 24.300–24.350, with upside potential for EUR/PLN, while EUR/HUF may rise near term before a potential support level at 362. The second half of the month typically has less market activity, with only the National Bank of Hungary's meeting on Friday generating attention. Headlines from the Middle East and US suggest a slightly positive start to the day.
Polish wage data for August, retail sales, and the Hungarian National Bank meeting are on the agenda. The Hungarian bank is expected to pause its mini easing cycle, maintaining a 5.50% policy rate and possibly reducing its inflation target to 2.0%. Czech consumer demand data will be released on Thursday, followed by the Czech National Bank's minutes on Friday.
CEE currencies remain weak, and ING retains a bearish outlook for the week ahead, citing limited US-Iran progress, high energy prices, and a stronger US dollar. EUR/CZK is still seen at fair value, while EUR/PLN has upside potential and EUR/HUF could test 362.
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