CEE: Signs of Recovery Emerge as Currencies Gain Strength

CEE: First sign of recovery

The beginning of the week showed that a good mood is returning to the region. However, CEE FX is still not settled and we expect higher volatility in the days ahead. The local calendar is empty today and again the focus will be on the global story.

We see the Hungarian forint as the main indicator of recovery in the region, having lost around 5% last week. Yesterday, on the other hand, it showed a 1% appreciation, the biggest daily appreciation since April, and returned to 380 EUR/HUF, which we believe may be a trigger for further inflows. Thus, a move below 380 EUR/HUF will be on the table today and we expect gains for the rest of the region as well if the global story permits. The Polish zloty posted some gains yesterday too and still has room to make up for last week's losses. We see the next level at 4.430 EUR/PLN.