CE4 currencies are expected to remain well supported despite the prospect of broader monetary easing across the CEE region. Stronger levels against the euro, however, may be hard to achieve. Elsewhere, the softer dollar environment may paper over a few cracks in the domestic stories for both the South African rand and the Israeli shekel
Scope for further PLN gains seems limited. According to the central bank’s estimates, profitability of Polish exporters ceases around 4.30. €/PLN moving below 4.40 should encourage the Ministry of Finance to refrain from converting FX proceeds via the market. Also, based on our estimates (relative value model, gauging €/PLN against other market variables) the zloty is currently somewhat overvalued against the euro.
Based on available market comments, we fear that investors may be overly confident in a market-friendly conclusion to this year’s parliamentary elections. Also, with recovering internal demand, the current account surplus should vanish next year. This calls for a higher €/PLN in the fourth quarter and in 2024.\
