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Strong Rebound on HUF and PLN This Month

EM FX
  • Last month, we saw that CEE currencies experienced significant selling pressures amid broad USD strength and rising inflationary pressures.
  • RSI indicator was showing that HUF, PLN and CZK were moderately to significantly 'undervalued' (against the USD), and therefore were likely to consolidate this month as momentum on the USD eases.
  • HUF and PLN have been the best performing currencies so far since the start of the month, up 1.5% and 1.4%, respectively, against the USD.
  • Last week, the positive surprise in inflation in Poland, with CPI coming in at 5.8% YoY in September (vs. 5.5% exp.), led to a surge in forward rates, with NBP very likely to start a tightening cycle next month.
  • The market will also strongly focus on NBH policymakers' speeches and the September inflation print (coming out on Oct 8).

Source: Bloomberg/MNI

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