BOC SAYS DOESN'T NEED TO ALTER PATH OF QT RIGHT NOW

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Commerzbank on CEE Currencies

CEE
  • Polish and Hungarian national banks surprised in opposite directions yesterday.
  • NBP’s decision, which governor Adam Glapinski will elaborate upon at a press conference today, came at a time when most peer central banks – from Hungary to Czech to Romania – were all surprising in the hawkish direction. Whatever rationale Glapinski is likely to offer today is unlikely to be totally convincing for markets.
  • As a result, the zloty not only underperformed the forint noticeably yesterday, the dovish NBP surprise became a driver for the forint’s rally in an absolute sense as well.
  • This is because of the way the PLN-HUF cross is traded as a relative value play in international markets – a reversal of positioning from long to short will typically also reflect in straight EUR-HUF and EUR-PLN performance.
  • While a broader risk on rally was underway in markets yesterday, EUR-PLN did not move lower, while EUR-HUF moved significantly lower, nearly back to the 400.00 mark.
  • Based on current monetary stance, the zloty’s underperformance could extend if a risk rally continues.
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