June 5, 2020 / 6:21 AM / a month ago

Czech crown seen leading CEE FX gains over next year: Reuters poll

PRAGUE (Reuters) - The Czech crown should gain the most among central European currencies over the next year as economies recover from massive hits due to the coronavirus outbreak, although Romania’s leu is likely to stay under pressure, a Reuters poll showed on Friday.

With central Europe reopening after lockdowns and factories getting back to work, economies are likely to face the worst of the crisis in this quarter before a long recovery ahead.

However, with the pace of recovery still uncertain and the risk of a new pandemic wave hanging over markets, currencies in the region are not expected to yet return to pre-crisis levels.

Over the next 12 months, the crown was seen gaining 3.6% to 25.705 to the euro.

Hungary’s forint was seen firming to 341.67 to the euro, a 0.9% gain from levels seen on Thursday. The Polish zloty, the most liquid currency in central Europe, was expected in the poll to gain 1.8% to 4.35 to the euro.

Median 12-month forecasts in the poll were slightly stronger than a poll in May.

“I am a bit more upbeat on the Czech crown due to solid fundamentals of the economy and still relatively attractive interest rate environment compared to the euro zone,” said Radomir Jac, chief economist at Generali Investments CEE.

He said while the same could be said of the forint and zloty, the difference was Polish interest rates are at new lows while Hungary’s central bank could use currency gains to loosen policy more.

Jiri Polansky, an analyst for Erste Group Bank’s Ceska Sporitelna, also forecast faster gains for the crown, helped by Czech inflation being higher than the rest of the region and what he saw as chances the central bank will begin to hike rates in the summer of 2021, undoing 200 basis points of cuts since March.

In Romania, the leu was forecast to lose 1.4% over the next 12 months, falling to 4.9075 to the euro as fiscal risks continue to weigh.

Reporting by Jason Hovet and Mirka Krufova; Editing by Andrew Cawthorne

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