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PLN: CZK: Staying Above 6.0

PLN
PolandCEEMEAEM BulletBulletEmerging Market News

PLN/CZK hovers above the 6.00 threshold despite today's downtick. The recent spell of consolidation after breaching the aforementioned round figure has allowed the RSI to return from oversold territory. With the rate trading at 6.0159, bulls look for a move towards Oct 14, 2020 high of 3.6184.

  • Geopolitical risk remains an important driver of sentiment towards CEE assets. While the prospect of a ceasefire in Ukraine is a positive, the shape and sustainability of any peace agreement remains in question. The extent of concessions that the Trump administration is ready to offer to Russia will be under scrutiny, after press reports suggested that Moscow reiterated its demands re: regional security during its talks with US officials.
    • Both countries have been among the key advocates of steadfast Western support for Ukraine, in contrast with the other two V4 members Hungary and Slovakia. However, Poland's geographical conditions (e.g. borders with Russia and Belarus) increase its exposure to any potential escalation in regional geopolitical risk.
  • The CNB reduced the two-week repo rate by 25bp to 3.75% in a unanimous decision earlier this month, which can be contrasted with the NBP's decision to leave the reference rate at 5.75%. This brought the spread between their respective key policy rates (NBP vs. CNB) to 200bp from -100bp at the beginning of 2024.
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PLN/CZK hovers above the 6.00 threshold despite today's downtick. The recent spell of consolidation after breaching the aforementioned round figure has allowed the RSI to return from oversold territory. With the rate trading at 6.0159, bulls look for a move towards Oct 14, 2020 high of 3.6184.

  • Geopolitical risk remains an important driver of sentiment towards CEE assets. While the prospect of a ceasefire in Ukraine is a positive, the shape and sustainability of any peace agreement remains in question. The extent of concessions that the Trump administration is ready to offer to Russia will be under scrutiny, after press reports suggested that Moscow reiterated its demands re: regional security during its talks with US officials.
    • Both countries have been among the key advocates of steadfast Western support for Ukraine, in contrast with the other two V4 members Hungary and Slovakia. However, Poland's geographical conditions (e.g. borders with Russia and Belarus) increase its exposure to any potential escalation in regional geopolitical risk.
  • The CNB reduced the two-week repo rate by 25bp to 3.75% in a unanimous decision earlier this month, which can be contrasted with the NBP's decision to leave the reference rate at 5.75%. This brought the spread between their respective key policy rates (NBP vs. CNB) to 200bp from -100bp at the beginning of 2024.