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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CEE
- As selling pressure on CEE currencies has been extremely elevated in recent weeks due to the deterioration in Russia/Ukraine conflict, central banks have stepped into the market to stabilize the exchange rates.
- As a result, investors have immediately turned their attention on the level of FX reserves in the CEE region in order to see which country is the most vulnerable in case market uncertainty remains high in the medium term.
- Czech Republic has historically been known to be one of the countries with the highest level of FX reserves.
- They are currently estimated to be at 70% of the country’s GDP, far above the EM range of 20%/40%.
- One interesting measure that analysts have followed over time has been the number of months of imports covered by foreign reserves.
- This chart (source: Bloomberg/CEE Central Banks) shows that Czech Republic remains far ahead in the CEE region, with total reserves covering over a year of imports.
- On the other hand, Hungary is the most vulnerable country among the CEE region, with total reserves covering less than 4 months of imports.
- As a result, CZKHUF cross rate has been testing new all-time highs in current environment, and CZK offers an attractive premium following recent selloff and could experience a significant rebound in case the situation eases.
Source: Bloomberg/CEE Central Banks
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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