Forint could gain most in central Europe

14 Sep, 2020

PRAGUE: The Hungarian forint should gain the most among central Europe's currencies over the next 12 months with a near 4% rise, a Reuters poll showed, as the region looks to return to an interrupted firming trend.

Central European currencies have been knocked off an appreciation path over the past month, with data showing the deep economic hole the region has to climb out of amid the coronavirus pandemic and, in Hungary's case, the central bank loosening policy.

An Aug. 28-Sept. 3 Reuters poll of 32 analysts showed a return to firming would likely be uneven for most currencies as some weakening was expected in the coming months.

Second-quarter gross domestic product in Hungary declined 13.6% year-on-year, the steepest fall in the region. The data, and renewed bond purchases by the central bank, pushed the forint to a nearly 5-month low of 359.05 to the euro this week.

According to the median forecast in the poll, the forint was seen firming to 345.00 to the euro, a gain of 3.9% over Wednesday's close of 358.30. Gergely Suppan, senior economist at Magyar Takarek, said signs of an expected economic recovery in the rest of this year could turn the forint's course.

"I consider the forint's weakening to be excessive," he said. The Czech crown and Polish zloty were both seen firming 1.5% and 1.2% respectively. The crown was seen at 25.93 to the euro in 12 months and the zloty at 4.364 - both a touch weaker than a poll a month ago.

Both currencies, like the forint, were not expected to regain enough to hit pre-coronavirus levels in the next year. In Romania, the leu was expected to weaken 1.0% to 4.89 per euro as political worries continue to weigh.

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