The National Bank of Poland (NBP) once again stepped into the market and sold “a certain amount of foreign currency for zlotys” on Monday. Recall that the NBP is armoured with EUR
64bn of FX reserves (as of the end of August).
After the NBP move, the zloty
gained as much as 1% against the euro
. Hence, the zloty
was the only exception in a yet another gloomy session as the koruna
and the forint
lost about 0.7% and 0.9% respectively. Let us remind that the results of a two-day meeting of Polish central bankers will be announced tomorrow. We expect that the NBP will leave interest rates unchanged.
With this respect, further actions of Hungary’s central bankers seem to be much more interesting. The forint
moved even closer to 300 EUR/HUF level. We believe that expectations of 50 bps rate hikes in October and November are quite reasonable. Rising likelihood of rate hike is well reflected in Hungarian swap curve. Nevertheless, the Monetary Council could be slower as the new members may fear of acting.
During the weekend, it became clear that Greece would fail to meet the targets of the EU/IMF bailout package. Moreover, yesterday’s Ecofin meeting didn’t provide any evidence that Europe was coming closer to a solution for the Greek debt crisis. Therefore, we do not see many reasons for a significant change in global risk appetite and that is why we expect that the regional currencies and Hungarian government bonds should remain under pressure.