Zloty Weakens as ING Maintains Bearish Stance on CEE FX

Key Moments

ING’s Frantisek Taborsky maintains a bearish stance on Central and Eastern European FX following last week’s risk-off environment.
EUR/PLN moved above the 4.400 threshold to new highs since 2023, with ING seeing scope for additional upside.
ING expects a hawkish Czech National Bank at its November meeting and sees EUR/CZK moving back toward the 24.250–24.300 band, while EUR/HUF nears 368 where fresh selling interest is anticipated.

ING View: CEE FX Under Pressure

ING strategist Frantisek Taborsky continues to hold a negative outlook on Central and Eastern European currencies after last week’s broad risk-off move in markets. He highlights that the deterioration in global risk sentiment has amplified existing headwinds facing emerging market currencies, including those in the CEE region.

Taborsky notes that the macro and event calendar is relatively sparse this week, with market participants primarily concentrating on upcoming policy meetings at the Federal Reserve and the European Central Bank.

Zloty Identified as Regional Weak Spot

The strategist points out that EUR/PLN pushed to new highs since 2023 on Friday and decisively moved above the closely watched 4.400 level. He reiterates ING’s view that the Polish zloty remains the weakest currency in the regional complex.

According to Taborsky, the zloty’s previous interest rate outperformance compared with its CEE counterparts has not prevented further currency weakness, and ING sees room for EUR/PLN to climb further from current levels.

Currency Pair	Key Level / View	Comment
EUR/PLN	Break above 4.400	Zloty seen as most vulnerable in CEE; scope for further upside in the pair
EUR/CZK	24.250–24.300	Hawkish CNB stance expected to pull the pair back into this range
EUR/HUF	368	Pair is nearing a level where ING expects new sellers to appear

Upcoming Data: Inflation and Growth Signals

Taborsky underscores that the first significant data points of the week are due on Friday. These include October inflation data for Poland, along with third-quarter GDP releases from the Czech Republic and Hungary.

He indicates that inflation in Poland is expected to ease from 4.1% to 3.7% year-on-year, driven primarily by the introduction of a government cap on fuel prices. On the growth side, ING expects Czech GDP figures to show a slowdown to just under 2.0%, while Hungarian GDP is anticipated to signal an ongoing recovery to similar growth rates.

Czech National Bank Outlook and FX Implications

Turning to the Czech Republic, Taborsky notes that the blackout period ahead of the Czech National Bank’s November policy meeting begins on Thursday. He points out that there were already some initial communications from CNB officials last week, with additional comments likely in the days ahead before the blackout takes effect.

ING’s base case is for the CNB to raise interest rates at the November meeting, with the central bank currently in the process of guiding the market toward this outcome. Taborsky adds that recent inflation data from Poland, due on Friday, could contribute to some stabilization in broader regional markets.

He also observes that EUR/CZK has recently diverged from the interest rate differential, and he expects that a more hawkish CNB stance should help drive the exchange rate back into the 24.250–24.300 range.

EUR/HUF Nears Level for Potential Selling

On the Hungarian forint, Taborsky notes that EUR/HUF has been steadily moving higher and is now approaching the 368 area. ING expects that this level could attract renewed selling interest in the pair.

Direct Commentary

“The significant deterioration in global sentiment last week has only intensified existing pressure on emerging market currencies, and we remain bearish on the CEE region. The calendar is light this week, with attention focused on the upcoming Fed and European Central Bank meetings.”

“On Friday, EUR/PLN tested new highs since 2023 and broke through the key 4.400 level. We have long identified the zloty as the most vulnerable currency in the region, and given its rate outperformance relative to CEE peers, there is likely further upside for EUR/PLN.”

“The first notable data releases will arrive on Friday, featuring October inflation figures for Poland as well as 3Q GDP data for the Czech Republic and Hungary.”

“Inflation in Poland is expected to fall from 4.1% to 3.7% year-on-year, largely due to the introduction of a government price cap on fuel. GDP figures should confirm a slowdown in the Czech Republic to just under 2.0%, while showing a continued recovery in Hungary to similar levels.”

“In the Czech Republic, a blackout period begins on Thursday ahead of the Czech National Bank’s November meeting. We saw some initial statements last week and expect more in the coming days. We anticipate a rate hike at the November meeting, with the CNB currently preparing the market for such a move.”

“Friday’s inflation data from Poland could help stabilise the market. EUR/CZK also decoupled from the interest rate differential; a hawkish CNB should help the pair return to the 24.250–24.300 range. EUR/HUF is gradually approaching 368, a level where we expect new sellers to emerge.”