The Central European currencies remained nearly flat yesterday. While the zloty got a touch weaker, the forint and the koruna turned slightly stronger. The EUR/HUF has been trying to break below 309, but without success so far...
In Poland, the yesterday-released macro data met expectations. Compared to December, the retail sales dynamics somewhat softened in January, but it still remained at very solid +4.8 % y/y. Fastest growing items in the Polish consumer basket include cars, food, drinks and tobacco. Let is recall that the Polish retail sales´ growth is reported in nominal terms and hence part of it is owing to inflation in the food sector. However, overall inflation is very low in Poland nowadays (0.7 % y/y in January) and the strong retail sales growth therefore does underpin solid prospects of real consumption growth.
The CE currencies continue to shrug off vast political changes happening in Ukraine. Direct economic exposure of the region to the Ukrainian economy is small, and even the worst-case-scenario of state bankruptcy does not provoke big fears. Nevertheless, potential geopolitical tensions and frictions could become a much more serious problem, namely if the current tug-of-war between Russia and the EU over Ukraine intensified. Poland and Romania, having the longest boarder with Ukraine, would be probably hurt most.