Yesterday, the CEE currencies remained rather stable. The forint has slightly rebounded from its 14-month low; nevertheless, given difficult domestic situation, we see the risk of its further weakening very high. The Czech currency was supported by hawkish comments by two Board members of the central bank, Mojmir Hampl and Kamil Janacek, who stated that the Czech monetary policy was loose enough to allow gradual export-led recovery and FX interventions were not currently on the agenda. In contrast, the Polish zloty eased as industrial output fell more than expected in February. Industrial output shrank by 2.1%, construction output decreased by 11.4% and car production fall even by 29%. These data indicate that also GDP figures for Q1 2013 might surprise negatively.
Today, the regional macroeconomic calendar is empty. Markets will be thus watching mainly the situation in Cyprus. Yesterday the Cyprian parliament unanimously refused EU bailout package. Although Cyprus is a small economy, uncertainty surrounding solution of its bank crisis may significantly worsen the risk sentiment. We thus believe that until the crisis on the island is resolved, the CEE currencies will remain under the pressure.