Hungarian forint at 3-months high, while the zloty and the koruna remain under pressure

Hungarian forint extended its gains after a favourable 2013Q1 GDP result reported last Wednesday. The forint hit the 3-month high and tested 290 EUR/HUF. Its performance contrasts with those of regional peers in Poland and in the Czech Republic, where fresh GDP data disappointed. Both the zloty and the koruna are close to important technical levels at 4.20 EUR/PLN and 26.00 EUR/CZK, respectively. In

Poland, recent dovish comments of NBP, signalling possibility of a rate cut as early as at the next meeting, could also have weighed on the currency. In the Czech Republic, surprisingly negative growth figures could support doves on the CNB board. Nevertheless, we do not expect central bank´s new forecast to imply koruna significantly weaker, above 26.00 EUR/CZK. It is also worth mentioning that while the Q1 GDP report was disappointing, situation actually might not be as gloomy as suggested by most commentaries. The good news is that domestic consumption is bottoming out and terms of trade are improving.
 
While the real deterioration of net exports (and investment) is a bad news, indeed, it follows after a strong increase in exports last year. Moreover, Q1 exports might have been diverged by a strong winter or, in the Czech Republic, by a production pause at ŠKODA AUTO. In addition, the automotive industry (and the industry as a whole) is reporting fairly high capacity utilisation rates, which might indicate that a turnaround of the negative investment trend is nearby.