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ING expects Zloty and Forint to strengthen as CEE rates normalize
ING says CEE market pricing now implies about 60bp of tightening in the Czech Republic, 40bp in Poland, and 50bp of easing in Hungary over an 18-month horizon.
ING analyst Frantisek Taborsky says Central and Eastern European rate curves have repriced sharply, with the market now pricing more tightening in the Czech Republic and Poland and additional easing in Hungary.
The shift in rate expectations, he said, has not yet fully translated into FX, creating room for selected currencies to strengthen. ING continues to target a firmer Polish zloty and Hungarian forint even as rate differentials narrow.
ING expects EUR/PLN to move below 4.300 and EUR/HUF below 358, while it projects EUR/CZK to rise above 24.200 because the Czech currency does not benefit from the same rate-FX dynamic.
The note adds that the outlook could change if the US-Iran conflict re-escalates and pushes oil prices higher, while ING also flags potential dovish comments from the Czech National Bank as a factor that could support EUR/CZK upside.