Scratched nerves over Greek debt and the strained structure of Europe’s single currency are finally having the expected effect on Eastern Europe’s currencies, breaking an unusual recent trend to push them lower.
The Hungarian forint, Czech koruna and Polish zloty have all defied expectations and gained against the tumbling euro in recent weeks, reflecting the depth of the euro’s woes as it has fallen by 7% against the dollar since early December.
Since mid-way through Wednesday, however, spooked investors have returned to a more familiar trading mode, shoving these currencies lower against the euro as they retreat from the perceived risks of emerging markets.
“It became clear once again yesterday: Risk appetite is the main driver for the zloty exchange rate,” said analysts at Commerzbank Thursday. The zloty often sets the tone for other currencies in the region, because it is seen as one of the strongest local bets.
source: WSJ