On Wednesday, the CE currencies experienced another calm trading although global risk appetite further deteriorated. The Hungarian forint posted small losses although PM’s chief of staff Varga said that the country might receive funds of 15 – 20 bln EUR from the IMF in order to be able to repay the first bailout package received back in 2008. According to Varga, the deal might be reached by the end of January. The Czech koruna closed barely changed and hence paid no attention to reassurance of FinMin Kalousek that he will stick to approved budget deficit of 105 bln CZK even if the economic situation gets worse.
Today, the figure on Czech PPI was released and it again confirmed the pressure on prices stemming from high commodity prices. Nevertheless, this will probably have no impact on the trading. More likely, regional currencies will focus on Spanish bond auction. Even though that the initial reaction on better than expected European PMI is positive, we think that the risks for CE currencies remain skewed towards further depreciation. In the case of the zloty, however, the room for losses might be limited due to expected interventions of the BGK bank towards the year-end.