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Growth, rate hikes to jack up main CEE currencies - Reuters poll

Published 07/12/2017, 08:09
Updated 07/12/2017, 08:10
© Reuters. FILE PHOTO: Polish currency zloty coins are seen in this photo illustration taken in Warsaw

By Sandor Peto

BUDAPEST (Reuters) - Central Europe's robust and stable economic growth is expected to boost the crown, zloty and forint next year, with the former two also getting help from likely monetary tightening, a Reuters poll found.

The median forecasts in a Dec 1-6 Reuters poll of 39 analysts showed that the world's best-performing currencies this year - the zloty and the crown - could extend gains in 2018.

Hungary's forint is expected to regain some of the ground it lost this year, even though the Hungarian central bank is not expected to start to tighten monetary policy.

The Czech crown is seen gaining 2.6 percent in the next 12 months relative to Tuesday's close, to 25 against the euro, a firmer level than 25.165 projected for the one-year horizon in a survey a month ago.

The crown has already firmed more than 5 percent this year after the Czech central bank (CNB), fighting rebounding inflation, removed a cap in April that had kept it weaker than 27 per euro for years and has raised interest rates twice since August.

A sound economy and expectations for further rate hikes are seen keeping the crown on a firming course.

The poll was conducted mostly before Governor Jiri Rusnok said the CNB may raise its 0.5 percent base rate by quarter of a percentage point each half-year.

Poland's central bank played down inflation risks after its meeting on Tuesday, but most analysts expect it to start to raise interest rates in the last quarter of 2018 at the latest.

"We still expect very good macroeconomic data over the next 12 months in Poland and (the) CEE region," said Mateusz Namysl, analyst at Raiffeisen in Warsaw.

"We also expect that good economic data may change the attitude of MPC (Monetary Policy Council) in Poland so that they may start raising interest rates in the second half of 2018."

The poll sees the zloty firming 1.5 percent to 4.145 versus the euro in the next 12 months, compared with last month's 4.21 forecast.

Hungary's central bank (NBH), regarded as one of the most dovish monetary authorities in the world, announced new loosening measures just last month and is unlikely to join a global trend of tightening next year, analysts said.

The forint is still seen firming 2.2 percent by December next year, to 307.34 per euro.

"Hungary's current account surplus and a generally good performance in emerging markets strengthens the forint," said Gabor Ambrus of NatWest, adding that the NBH would slow that process.

Elsewhere in Central Europe, the leu could ease 0.4 percent to 4.65 and the dinar shed 0.9 percent to 120.5 against the euro in the next 12 months according to the poll.

© Reuters. FILE PHOTO: Polish currency zloty coins are seen in this photo illustration taken in Warsaw

(For other stories from the FX poll:)

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