While the forint slightly strengthened, the koruna and the zloty weakened on Wednesday. Later in the afternoon, the Czech currency, which led the losses, approached this year’s low at EUR/CZK 25.76 while the zloty breached the resistance at EUR/PLN 4.173. Comments by NBP Monetary Policy Council (MPC) member Bratkowski probably intensified added pressure on the zloty in early afternoon; Bratkowski reiterated that he remained pessimistic about the recovery of the Polish economy and that additional rate cuts could be needed in May or June. However, to understand his words in a proper context, let us recall that Mr. Bratkowski is probably the most dovish member of the MPC that voted for a 150 bps rate cut in December last year. As for the Czech Republic, central bank governor Singer repeated for the WSJ that he would be ready to support interventions against the koruna if risks of undershooting the inflation target increased. Nonetheless, because the interview did not bring any breaking news, it should have no significant impact on the Czech currency.
Regarding regional debt auctions, they ran fine in the case of Czech well as Polish bonds. Bid-to-cover ratio exceeded 2 in the case of both three and nine year bonds in the Czech auctions, whereas yields of Polish two and five year bonds hit their all-time low.