The surge of energy prices has roused markets and politicians. A European solution is being worked on, but good advice is expensive. The ECB will briskly push ahead with rate hikes. Rates and inflation remain on the rise in CE, too - we expect a hike in PL and CPI spike in HU.
The deteriorating global economic outlook, the strong US dollar and persistently high energy prices continue to weigh on Central & Eastern European currencies. While the Czech koruna is expected to remain stable amid still high FX reserves of the central bank, the EUR/HUF is trading again close to it's all-time highs reached in July. Apart from the above-mentioned drivers, the still not certain EU funds' release is the main issue for the forint. SEE currencies are expected to depreciate once demand for energy imports increase, however, the central banks in the region have a firm grip on the currencies. Further east, the rouble continues to trade around 60 USD/RUB. However, a normalisation of the trade balance should lead to a gradual depreciation until year-end. Meanwhile, the USD and CHF have gained significantly against the euro, which is unlikely to change anytime soon.