Thursday, 03 September 2015 17:21
BUCHAREST: Central European currencies were virtually unchanged on Thursday with the Polish zloty edging up ahead of a European Central Bank’s monetary policy meeting, which could yield hints of stepping up quantitative easing.
The zloty, Central and Eastern Europe’s most liquid currency, gained 0.2 percent, reaching 4.229 to the euro.
“If the ECB sends reassuring signals to the market today (…) the euro/zloty could be pushed lower towards 4.21,” BZ WBK analysts said in a note.
The zloty rebounded in late trading on Wednesday, helped by stronger-than-expected US productivity data.
By 0810 GMT, Hungary’s forint was flat at 303.7 to the euro. The Romanian leu edged down 0.1 percent to 4.439 and the Czech crown lingered at 27.033.
Poland’s central bank on Wednesday left its benchmark interest rate unchanged at 1.50 percent, in line with the expectations of analysts polled by Reuters.
According to analysts from Poland’s mBank, China’s weakness and a new wave of deflation exported from emerging markets should be an argument supporting rate cut expectations.
“Short-term prospects for Polish assets, including longer bonds are not positive, though, as they can be dominated by portfolio effects linked to investors leaving the emerging markets in a hunt for more liquidity,” they said in a note.
Polish central bank Governor Marek Belka said on Wednesday the zloty may weaken significantly if a large number of Poles convert Swiss franc mortgages into zlotys under the terms of a bill now before parliament.
Elsewhere, in Romania, the lower house of parliament is expected to almost unanimously approve a cut in the value-added tax to 20 percent from 24 percent due to take effect on Jan. 1, 2016 as agreed by main political parties last month.
“This should not prove material for markets over the short term,” ING analysts in Bucharest said in a note.
“We expect the cut-off yield at today’s 400 million lei, 2.5-year treasury bond auction to print around 2.05 percent, which is yesterday’s mid,” they added.
Hungary also scheduled three tenders for papers with maturities ranging from 2018 to 2031.
