CEE Exchange Rates Report for November 25th – 29th
By: Zoe McLaughlin, The Quinnipiac University Economics Research Team
CEE Currencies Index
Source: Eurostat and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency) and then indexed to 100 at the start of the period.
During the week of November 25 – November 29, the Czech koruna (red), Hungarian forint (green), Polish złoty (blue), and Romanian leu (purple) all decreased in value relative to the United States dollar. The Czech koruna decreased relative to the United States dollar by 1.82%. The Romanian leu ended the week with a decrease of 1.41%. The Polish złoty ended the week at a decrease of 2.36%, the most significant decrease of the four currencies. The Hungarian forint experienced the least significant change, ending the week at a decrease of 1.27% relative to the United States dollar. All four currencies gradually decreased throughout the week, reaching their lowest points on November 29.
CEE Currencies Historical Trends
Source: DBNomics and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency). The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.
The Czech koruna, Hungarian forint, Polish złoty, and Romanian leu are all over one standard deviation below their respective three-month rolling averages, continuing their recent downward trends from October throughout the month of November. However, this week was the first in recent months where these four currencies did not all demonstrate decreases. The Czech koruna, Polish złoty, and Romanian leu have started to demonstrate increases. The Hungarian forint remained relatively stable, but it did not continue its decent.
Further Reading
This week, the Hungarian forint reached a two-year low against the Euro, continuing the forint’s recent downturn and instability. This is mainly driven by anticipated future interest rate cuts in Hungary as well as uncertainty about a change in leadership at the Hungarian National Bank. The forint’s continued decline has also been affected by regional pressures regarding the war in Ukraine. However, the forint’s decline this week makes it an outlier in the region compared to the złoty, koruna, and leu.
Central banks around the world are increasing their holdings of gold, including banks in Central Europe, who have now become some of the world’s biggest buyers of gold. The governor of the Czech National Bank stated that his goal is to reduce volatility, with a preference for gold due to its lack of correlation to stocks. The governor of Poland’s central bank emphasized the importance of increasing the Polish economy’s stability among catastrophic events. The Hungarian central bank has also significantly increased its holdings of gold this year with a focus on gold’s safety.
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