Friday, 13 November 2015 19:17
WARSAW: Central European currencies mostly eased on Friday as expectations for interest rate cuts next year weighed on Poland’s zloty, offsetting robust growth data.
Data published on Friday showed central and eastern European economies grew robustly in the third quarter despite China’s slowdown and prospects for a US interest rate hike, helped by low oil prices which left more cash in the pockets of consumers.
Despite the upbeat figures, the zloty eased 0.3 percent to 4.245 by 1047 GMT as analysts continued to expect 50 basis points of rate cuts next year.
“Despite economic growth being slightly better than expected, neither GDP or inflation data will alter expectations for rate cuts next year,” said Mateusz Sutowicz, an analyst at Bank Millennium.
“These expectations are the main driver for the zloty,” Sutowicz said.
Markets have begun pricing in additional monetary easing in Poland after the country’s socially conservative Law and Justice party (PiS) won the October election. One of the party’s senior lawmakers has said there was space for 25-50 basis points of rate cuts.
“With regard to rate cut expectations, there are motivated by political factors, despite macroeconomic data showing that the level of rates is adequate,” said Adam Antoniak, senior economist at Bank Pekao.
Investors will keep an eye on a batch of data releases in Poland at 1300 GMT, including a second estimate of October consumer price index (CPI), current account and money supply.
Hungary’s forint eased by 0.2 percent, but traders said the session was relative quiet and the currency remained within its trading range from the previous days.
Hungary was the only economy to grow less than expected in the region due to, among other things, a slowdown in manufacturing.
“(Hungary) has gone from being the region’s fastest growing economy last year to the slowest in the third quarter,” Capital Economics said in a note.
