Expected monetary easing in Hungary will weaken the forint in the next 12 months even though Central Europe's healthy growth and stability could support the region's currencies, a Reuters poll found on Thursday. In the February 29-March 3 poll of 41 analysts, the median forecast puts the forint at 314.75 against the euro at the end of February next year.
Analysts still anticipate Poland's zloty will firm to 4.25 on the 12-month horizon, which would be a 1.8 percent strengthening from Wednesday's close. The Romanian leu could gain 1.1 percent to 4.41 against the euro. Forint forecasts weakened after the Hungarian central bank knocked the currency down from 9-month highs last month, saying it might complement monetary stimulus through unconventional tools with interest rate easing.
"It is clear that the central bank is not allowing the forint to strengthen. They stopped it when it firmed through 307," said Zoltan Varga, analyst at Equilor brokerage in Budapest. Six out of 18 analysts still projected a firming of the forint in the next 12 months. "Factors helping the forint include a very strong foreign trade balance, pretty strong economic growth and Hungary's debt ratings may be also upgraded this year," said Janos Samu, analyst at Concorde in Budapest.
Sound fundamentals and expectations of more monetary stimulus from the European Central Bank's March 10 meeting have helped assets in the region's main economies outperform most other emerging markets in the world in the past few months. The zloty hit two-month highs and the leu 3-month highs against the euro this week. The Czech central bank keeps the crown on the weaker side of 27 against the euro with market interventions.
The bank said at its last meeting it would not exit the cap before next year though it was likely in the first half of 2017. In the poll, only 4 of 14 analysts forecast the crown would trade firmer at the end of February next year than the central bank's commitment level of 27 to the euro.