Feb 6 (Reuters) - The European Union's emerging currencies
are expected to maintain steep losses at least until the middle
of the year before then making gradual recoveries, according to
a Reuters poll of 45 analysts, traders and currency strategists.
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Following are comments from the respondents to the poll.
ON REGION
GERGELY SUPPAN, DZ BANK, BUDAPEST
"We expect a trend reversal around the end of the year...
Near the end of the second quarter, in developed economies
recession can become milder, this can start to improve risk
appetite, and in turn have a beneficial impact on currencies."
LARS TRANBERG RASMUSSEN, DANSKE BANK, COPENHAGEN
"Taking the (1997-1998) Asian experience into account, and
the magnitude of the CEE macro deterioration, one would have to
conclude that even though the CEE currencies have weakened
significantly in recent months, there is still room for further
significant weakening."
"As a result, we have adjusted our CEE/CIS FX forecasts in a
significantly more negative direction so they now more or less
mirror an Asian-style scenario."
* ON ZLOTY
PETER POPLAWSKI, BGZ, WARSAW
"The zloty is likely to remain under pressure both from
regional events and easing domestic fundamentals. Wide
expectations for monetary policy easing should also hurt demand
for the zloty."
ULRICH LEUCHTMANN, COMMERZBANK, FRANKFURT
"The zloty will remain under pressure due to the unpleasant
devaluation spiral. In the medium run, the significant
undervaluation of the zloty should lead to significant recovery
potential."
ON CROWN
PETER POPLAWSKI, BGZ, WARSAW
"The Czech Republic seems to have lost the status of a local
safe-haven and is likely to remain affected by the general
outlook on the CE region."
JAROMIR SINDEL, CITIBANK, PRAGUE
"We expect the Czech crown to be under pressure, reflecting
an underperformance of industrial production and export
activity. Moreover, we expect the Czech National Bank to
continue in a further reduction of the policy rate."
"Although we expect further reductions in the CNB's policy
rate (1 percent in 3Q09), the crown's depreciation above 28
against the euro this week is likely to force the central
bankers to be more vigilant after its February meeting, bearing
in mind that the Bank Board said in December (for the first time
since June 2007) that a weaker crown is one of the major risks
to the CNB's forecast."
"Therefore, we expect the CNB policy rate to be above that
of the ECB from 2Q09 (after having had a negative interest rate
differential for almost four years), as Citi's European
economists see the ECB's main policy rate at 0.50% in mid-2009."
RADOMIR JAC, GENERALI PPF ASSET MANAGEMENT, PRAGUE
"A Combination of deteriorating GDP performance and falling
CNB interest rates is historically related to CZK weakening (as
seen in 2H 2002 - 2003 period). This time sentiment is also hit
by the growing risk aversion of global investors, which is
particularly apparent in case of EMEA currencies."
"All those factors (i.e. worsening growth outlook, falling
interest rates and global aversion) will have a negative impact
on the crown also in rest of Q1, 2009. However, if we assume in
our base scenario that the CNB interest rates will find their
bottom in Q2, 2009 and on a level of the global economy it might
be clear that the worst is over and that some recovery of growth
becomes realistic for H2 2009 (and if global risk aversion
recedes in such constellation), the CZK may start to firm."
"Still, it will remain far weaker than in 2008 and the
26.00/EUR level is likely to be tested only at the end of 2009.
ULRICH LEUCHTMANN, COMMERZBANK, FRANKFURT
"In the short run, the monetary policy and economic
downswing weight on the crown. Recovery potential is limited, as
the crown is hardly undervalued."
ON FORINT
SANDOR JOBBAGY, CIB, BUDAPEST
"For the next three months there will be significant
uncertainty. It's in the cards that the forint may be
significantly weaker than our base forecast. We see a gradual,
slow firming. If it plunges too much, new (central
bank/government) measures will be needed, but if it does not, in
the medium- and long-term, appreciation is to come due to the
fundamental impact. Convergence will work in the longer run, but
of course in the short term there are plenty of risks."
ZSOLT KONDRAT, MKB, BUDAPEST
"A significantly weaker course than our base forecast cannot
be ruled out either, the probability of that is not
significantly smaller."
PETER POPLAWSKI, BGZ, WARSAW
"With poor domestic foundations and very poor perception on
Hungary of foreign investors the forint is likely to remain
strongly affected by global turmoil."
ULRICH LEUCHTMANN, COMMERZBANK, FRANKFURT
"The forint remains under pressure as the central bank is
largely neglecting the exchange rate. Recovery is limited as
Hungary faces a deep recession."
ON LEU
CRISTIAN MLADIN, BCR, BUCHAREST
"The central bank has become comfortable with exchange rates
above 4 (per euro), and the undergoing international financial
crisis is regarded as an opportunity to adjust the Current
Account deficit.
"The weakening pressures on the leu will not fade away in
the following months, as new poor economic data is expected in
H1. The central bank might join the monetary policy easing cycle
already adopted by other countries in the region."
"The FX rate could rather move sideways in 2009 than
continue to depreciate, while the National Bank sticks to its
"managed floating" regime. An agreement with international
financial institutions would make the pressure on the RON weaken
somewhat and could improve investor sentiment, which has
seriously worsened lately."
MELANIA HANCILA, VOLKSBANK, BUCHAREST
"We consider that the RON will continue to depreciate in the
coming months, but the pressure would ease down in the second
half of the year, as by the macroeconomic indicators improve if
the authorities conduct a restrictive fiscal policy, with focus
on infrastructure investments and implement adequate measures to
give a boost to the economy."
ULRICH LEUCHTMANN, COMMERZBANK, FRANKFURT
"The fundamental situation is risky. But the CB so far is
doing a good job. If the situation worsens significantly, we
expect the IMF to step in - with higher success probability than
in case of Hungary."
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(Editing by Andy Bruce)
