CEE Currencies Hold Steady as Hungary Readies Interest Rate Cut

Central and Eastern European currencies were relatively stable this week, except for Poland's zloty, which softened after Fitch kept its A- rating but stuck with a negative outlook.

The Hungarian forint was steady near 362 per euro ahead of the country's central bank's widely expected interest-rate cut. Economists polled by Reuters expect the base rate to be reduced by 0.25 percentage points to 5.5%, extending an easing cycle made possible by cooler inflation.

In Hungary, investors are waiting for the next move after the expected cut. If the central bank delivers the expected cut without signaling a faster pace of easing, the EUR/HUF exchange rate may stay range-bound, making 364 a key stress point on the weaker-forint side and roughly 360.50 the marker on the stronger-forint side.

In Poland, Fitch's decision was more bond-friendly than currency-friendly, with traders focused on the path for future rate cuts rather than the rating itself. Soft retail sales and hints that inflation pressure is fading keep Poland's economy in the spotlight.