CEE Exchange Rates Report for October 21st – 25th
By: Zoe McLaughlin, The Quinnipiac University Economics Research Team
CEE Currencies Index
Source: DBNomics 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 October 21 to October 25, all four Central European currencies—the Czech koruna (red), Hungarian forint (green), Polish złoty (blue), and Romanian leu (purple)—strengthened against the U.S. dollar. Leading this trend was the Hungarian forint, which recorded a substantial 1.36% increase by the end of the week. The Polish złoty followed closely, finishing up by 1.12% after reaching a mid-week peak of 1.56% on October 23. The Czech koruna also gained, though more moderately, closing the week with a 0.29% increase after hitting a mid-week high of 0.77%. The Romanian leu saw the smallest change, ending up by 0.20%, with a mid-week peak of 0.75% on October 23. This week reflects a collective upward trend for these currencies, though to varying extents.
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. This is a continuation of their collective recent downward trends, after peaking in late September to early October. The Czech koruna and Romanian leu are at levels similar to their August exchange rates, but the Hungarian forint and Polish złoty have reached three-month lows. However, after this week, all four CEE currencies have had a slight uptick, especially the Czech koruna and Romanian leu.
Additional Reading
Reuters conducted an interview with Jan Procházka, a board member of the Czech National Bank, on inflation, economic forecasts, and future monetary policy plans. Procházka indicated that the Czech National Bank plans to continue cutting interest rates due to slow growth and demand recovery, but they will closely monitor inflation in certain sectors, particularly services. The CNB is expected to cut rates again at their November 7 meeting. Overall, price increases in the services sector are continuing at a rate of 5%, pushing inflation above the CNB’s target of 2%. However, Procházka is not concerned that a recession is imminent for the Czech Republic.
At their October 22 meeting, the Magyar Nemzeti Bank, Hungary’s central bank, left interest rates unchanged, maintaining the base rate at 6.50%. In their report from this month’s meeting, the MNB indicated that they expect moderate inflation to persist as demand remains low and cited unstable oil prices due to geopolitical uncertainty as a concern. Additionally, they noted that central banks around the world have been taking a cautious approach lately, with most banks either making minor interest rate cuts or keeping rates unchanged.
The MNB also commented that economic recovery in Hungary has been slowing, citing declines in investment, agriculture, and global demand. However, the bank remains optimistic that demand and GDP growth will strengthen going into 2025, and that the currently unstable inflation will stabilize in the coming year.
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