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By Jason Hovet PRAGUE, April 5 (Reuters) - The Polish zloty is set to gain some ground on central European peers over the next year, likely appreciating 1% as economic worries abate, a Reuters poll showed on Wednesday. The zloty has avoided wild swings in recent market turbulence caused by worries over the global banking sector, but it has also seen almost zero gains this year, unlike peers the forint and crown, which are up over 5% and 2% respectively. The Polish currency has been weighed down by domestic factors such as concern over a lack of availability of European Union funds and a central bank that has sounded more determined to begin interest rate cuts than others in central Europe. While the poll featuring 38 analyst groups saw appreciation ahead for the zloty , the gains are likely to be modest.
The poll's median forecast saw the exchange rate at 4.6275 to the euro in 12 months' time, at the end of the first quarter next year, up 1.0% from Monday's closing level. "We maintain our moderately optimistic outlook," said Bank Millennium, one of the respondents, adding that falling inflation this year and a shrinking current account deficit will support the currency.
"Although the first quarter of 2023 brought increased negative pressure from sellers... the risk of a stronger weakening is systematically decreasing in our opinion," its analysts wrote.
Analysts in the poll, though, saw the two main gainers giving up some profits but staying on the strong side of the big psychological levels of 400 and 24 to the euro they respectively breached this year. "Together with the Czech crown, the Hungarian forint remains our favourite CEE currency in the current market conditions," ING economist Peter Virovacz said.
"The (Hungarian central bank) has made it clear that priced-in rate cuts are not on the table at the moment, which should keep FX carry by far the highest in the region." According to the poll the forint will be at 385 to the euro one year from now, a loss of 1.9% from Monday. The Czech crown is expected to ease 1.8% to 23.863 to the euro, which would put it just 2% off its peak so far this year of 23.35, which was the strongest level since 2008. Romania's leu was forecast to drop 1.6% to 5.02 to the euro. The Czech central bank, like Hungary, has sought to quell market expectations of monetary easing, and it maintains a pledge to prevent any strong weakening in the crown, which has given additional support to the currency.
Central European rate setters sharply lifted interest rates in 2021 and 2022 but have been on pause in recent months, mindful of economies that have slowed quickly or even fallen into mild recessions. "Given still elevated price pressures, we think the (Czech central bank's) strong policy support for the crown, which allowed EUR/CZK to trend steadily lower over the last year, is as strong as ever," Goldman Sachs said. "With our expectation that inflation will stay in the double digits at least until Q3, we expect this bias for FX appreciation to remain in place for most of the year."
(For other stories from the April Reuters foreign exchange
poll: )
(Reporting by Jason Hovet in Prague and Pawel Florkiewicz in
Warsaw, Editing by Raissa Kasolowsky)
