On Monday, Central European currencies posted relatively strong gains. The forint outperformed its peers although the new austerity measures (tax hikes) announced by Orban’s government weighed on both government bonds and Budapest stock exchange index in particular.
Interestingly, the strong yesterday’s performer was also the Polish zloty despite the fact that dovish rhetoric coming from the NBP intensifies. Nevertheless beside global factors the solid zloty’s performance could be caused by two additional factors: first, the smooth placement of EUR 750bn government euro-bonds with 12-year maturity and secondly by comments made by Polish president Bronislaw Komorowski. The President had indicated that Poland was drafting a timetable for joining the euro-zone. Moreover, Komorowski added that the Polish economy should be able to fulfil the entry criteria in 2015.
In our view such a target is, however, quiet ambitious for Poland and obviously Komorowski’s comments do not mean that the country is heading to join the euro-zone in 2016 or even in 2017. The government position, which is the executive arm in Poland, is much less clear in the issue of entry in to the monetary union.