CEE FX: Global headwinds pressure currencies – ING
ING’s EMEA FX & FI Strategist Frantisek Taborsky highlights that stronger regional hawkish repricing has not prevented rate differentials from narrowing or staying flat, leaving Central and Eastern European (CEE) currencies vulnerable as the Dollar rallies and global energy prices rebound.
Central and Eastern European (CEE) currencies are facing vulnerability as global headwinds pressure their value, according to ING's EMEA FX & FI Strategist Frantisek Taborsky. The strategist notes that despite a stronger regional hawkish repricing, rate differentials have narrowed or remained flat, leaving CEE currencies exposed to the rising US dollar and rebounding global energy prices.
Taborsky maintains a bearish bias on regional FX, projecting further weakness, with the Polish Zloty expected to underperform due to the central bank's relatively dovish stance. The shift in market sentiment, with higher regional rates, has not been enough to stabilize FX as the US dollar continues its rally. Coupled with the rebound in global energy prices, this environment creates overall negative conditions for CEE currencies.
ING's analysts expect further regional weakness for these currencies, with the Polish Zloty likely to underperform due to the central bank's more accommodating monetary policy compared to its peers.
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