The Hungarian forint kept on the good mood and the currency appreciated further yesterday. This time, the EUR/HUF pair broke through the key level of 265 and strengthened almost 1% to 263.50 by this morning. The forint has been outperforming its peers in the last two weeks suggesting that there could be country-specific factors behind the trend.
The 262.00 level could be the next strong resistance, which may test the strength of the current trend.
In-line with our expectations, the National Bank of Poland (NBP) decided to increase the reference rate by 25 basis points to 4% on Tuesday. According to the official press release, the significant increase in inflation expectations was the main reason for the NBP rate hike. Consequently, the zloty posted solid gains and drifted below 4 EUR/PLN level.
NBP’s Governor Belka and the key median voter in the Council said during the press conference that he could not say that the central bank was nearing the end of the tightening cycle. We bet on two more hikes this year. We think that the first one might come as early as at July’s monetary policy meeting.
As far as the zloty’s trading is concerned, we do not believe that the generally expected increase of Euro zone interest rates this Thursday might significantly weigh on the zloty. We think that the EUR/PLN currency pair could rather stay below the 4 EUR/PLN level.