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### POV: PLN WELL POSITIONED TO BEAT...>

POLISH ZLOTY
POLISH ZLOTY: ### POV: PLN WELL POSITIONED TO BEAT HUF ON ANY PROTRACTED CEE
WEAKNESS
-As Eastern Europe's largest energy importer, the rallying oil price in PLN
terms could become increasingly important for the Polish central bank's
inflation profile. Oil priced in PLN has rallied over 40% in the past year,
potentially pushing CPI closer to 3% by the year's end. In turn, the resulting
inflationary pressure may force the central bank to re-assess their record low
rates.
-This contrasts with Hungary, which may come under further pressure to boost
liquidity as 10y swap rates have nearly doubled in 2018, rising to 2.5% as the
central bank initially refused to boost swap supply in February. Nonetheless,
the operation now totals HUF 1.8trillion - a new high. This willingness to
remain flexible despite rate risk concerns and a poor budget deficit (albeit
partly due to election-related spending) make it increasingly unlikely the bank
will turn off the liquidity taps, thereby keeping a lid on the HUF.
-See MNI Analysis email for full details.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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