CEE currencies reached important technical crossroad. EUR/CZK is not far away from psychologically important 25.00/25.015 (lows of December 2011), EUR/PLN tests 200-day moving average (4.2153) and the forint tries to stay below 300 EUR/HUF. The recent appreciation was above all driven mostly by improving sentiment on the global markets and subsequent weakening of the US dollar. That is why the recent rally remains pretty vulnerable to global headwinds despite rather positive news from region.
Hungarian Prime minister Viktor Orban seems to be willing to make huge sacrifices to reach a deal with IMF. Hungarian Economy Minister Gyorgy Matolcsy also sounded very cooperative and compared the relationship with the IMF to those among family members.
In Poland we saw that according to preliminary forecasts by Poland’s Statistical Office (GUS), the Polish economy grew by 4.3% last year, i.e., 0.1% faster than expected. As concerns demand, the growth was primarily fuelled by investment, which, after eliminating the effect of inventories, went up by 8.7% y/y. The reasonable condition of the Polish economy was also discussed by the central bankers at their most recent January meeting. While central bankers recognise that a deceleration of the economy is expectable, they agree on the fact that growth remains fairly strong, in spite of noticeable rate hikes in the first half of last year. That is why markets more or less priced out bets on interest rate cuts in 2012, which subsequently could have helped the zloty.