CEE FX: Zloty expected to lag regional peers – ING

EUR/PLN has broken above 4.400. ING strategist Frantisek Taborsky highlights the move and expects further gains, with the zloty remaining Central and Eastern Europe’s weakest currency. Following last week’s risk-off move, he retains a bearish view on the region’s currencies. A hawkish Czech National Bank should bring EUR/CZK back towards 24.250–24.300. Meanwhile, EUR/HUF is approaching 368, where fresh sellers are expected to emerge.

4.400 Break Highlights Zloty Weakness; CNB Support in Focus

"The significant deterioration in global sentiment last week has only intensified existing pressure on emerging market currencies, and we remain bearish on the CEE region. The calendar is light this week, with attention focused on the upcoming Fed and European Central Bank meetings."

"On Friday, EUR/PLN tested new highs since 2023 and broke through the key 4.400 level. We have long identified the zloty as the most vulnerable currency in the region, and given its rate outperformance relative to CEE peers, there is likely further upside for EUR/PLN."

"The first notable data releases will arrive on Friday, featuring October inflation figures for Poland as well as 3Q GDP data for the Czech Republic and Hungary."

"Inflation in Poland is expected to fall from 4.1% to 3.7% year-on-year, largely due to the introduction of a government price cap on fuel. GDP figures should confirm a slowdown in the Czech Republic to just under 2.0%, while showing a continued recovery in Hungary to similar levels."

"In the Czech Republic, a blackout period begins on Thursday ahead of the Czech National Bank's November meeting. We saw some initial statements last week and expect more in the coming days. We anticipate a rate hike at the November meeting, with the CNB currently preparing the market for such a move."

"Friday’s inflation data from Poland could help stabilise the market. EUR/CZK also decoupled from the interest rate differential; a hawkish CNB should help the pair return to the 24.250–24.300 range. EUR/HUF is gradually approaching 368, a level where we expect new sellers to emerge."

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