EUR/PLN

ING strategist Frantisek Taborsky says Moody’s downgrade of Poland to A3 adds to pressure on CEE assets at the start of a relatively quiet second half of the month.

Frantisek Taborsky at ING argues that the stronger US Dollar (USD) following the Federal Reserve (Fed) meeting is clearly negative for emerging markets, keeping Central and Eastern European (CEE) currencies under pressure.

ING’s Frantisek Taborsky explains that a surge in energy prices, a jump in US 10-year yields to 5% and a stronger Dollar have hit CEE currencies and pushed local rates higher.

ING’s Frantisek Taborsky notes that the National Bank of Poland maintained a dovish stance, signalling no need to adjust rates potentially until mid-next year despite rising inflation.

Commerzbank’s Antje Praefcke reports that the Polish central bank kept its key rate at 3.75%, while Governor Glapiński signalled no cuts until year-end after previously sounding dovish.

ING’s Frantisek Taborsky reports that the National Bank of Poland left rates at 3.75% and provided limited new guidance, shifting focus to Governor Glapinski’s press conference. With markets already pricing around 85bp of tightening, ING sees a high bar for a hawkish surprise.