Forint rally seen collapsing, crown has room to run
* Reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/fx-polls? RIC = EURCZK = Euro / Czech crown
* Reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/fx-polls? RIC = EURHUF = Euro / Hungarian forint
* Reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/fx-polls? RIC = EURPLN = Euro / Polish Zloty
* Reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/fx-polls? RIC = EURRON = Euro / Romanian leu
* Reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/fx-polls? RIC = EURRSD = Euro / Serbian dinar
PRAGUE, June 4 (Reuters) – The Hungarian forint, the biggest gainer among central European currencies so far in 2021, is expected to fall in the coming months and reverse a recovery fueled by rate hike expectations, while the Czech crown still has room to gain, a Reuters poll revealed on Friday.
The central banks of Hungary and the Czech Republic have both signaled the possibility of a rate hike as early as this month after more than a year of loose policies adopted to cushion the fallout from the COVID-19 pandemic.
Slowing infection rates and increasing vaccinations in central Europe are boosting economic recovery and inflation rates are among the highest in the European Union.
The forint has risen 2.6% since May 17, when a central bank official first raised the possibility of a rate hike this year. Overall, the forint has gained 4.9% so far in 2021 to reach its highest level since August of last year.
However, a Reuters poll quickly found a reversal and the forint fell 1.2% from nearly 350 on Wednesday to the euro in 12 months.
“The forint gains will not be permanent… because many hikes have already been incorporated,” said ING. “The current account is expected to be in a modest deficit and the question arises as to whether (the central bank) is ready to tolerate too strong a HUF.”
The June poll was the first since early 2020 to forecast a weaker forint a year from now.
The crown, however, probably still has room to rise 3.2% so far in 2021. The poll’s median forecast saw the crown rise to 25.20 per euro in 12 months, for an additional gain 1.0% from Wednesday’s closing level. .
Analysts expect the Czech central bank to be more aggressive than the Hungarian central bank when it finally enters its tightening cycle.
Some central bankers have said that a Czech rate hike could take place in June or August, the latter date in line with staff’s new economic forecasts.
In Poland, the largest economy in Central Europe, the zloty has lagged its peers this year, strengthening 2.3% so far. Some analysts say this offers a good entry point, before catching up on the krona and forint gains.
The poll predicted an increase of 0.8% over the next year to 4.42 per euro, a 12-month forecast stronger than in a May poll.
The Romanian leu, meanwhile, is expected to decline 0.9% to 4.965 per euro, with slow fiscal consolidation ahead and expansionary monetary policy still in place.
(For more articles from the June Reuters currency poll 🙂
(Reporting by Jason Hovet and Miroslava Krufova in Prague; Editing by Kirsten Donovan)