Central and Eastern European (CEE) currencies are experiencing downward pressure due to a prevailing risk-off global sentiment, according to ING strategist Frantisek Taborsky. The EUR/PLN and EUR/CZK currency pairs are moving towards the upper ends of their recent trading ranges, specifically EUR/PLN 4.230-260 and EUR/CZK 24.250-400, as the US Dollar rallies and downside risks accumulate. Taborsky notes that the negative economic and current account impacts from these trends are expected to become evident in the coming months [1].
The Hungarian forint (HUF) has shown some resilience since the April elections, but profit-taking and a dovish stance from the National Bank of Hungary (NBH) could undermine FX carry trades. Taborsky warns that if EUR/HUF rises above 365—a level where the market began pricing in NBH rate cuts—there could be unwinding of rate cut bets and further FX weakness spilling into the rates market. As of the previous close, EUR/HUF stood at 362 [1].
In contrast, Latin American (LatAm) equities have attracted strong inflows, supported by improved terms of trade and resilient regional currencies, according to Geoff Yu at BNY. LatAm economies have benefited from better supply resilience and increased demand for raw exports, which has helped their currencies withstand shocks from recent global conflicts. However, Yu cautions that higher real rates and tighter financial conditions could eventually pressure corporate and household earnings, potentially leading to softer equity performance and increased demand for currency hedging [2].
While CEE currencies face immediate downside risks from global sentiment and central bank policy, LatAm markets are currently buoyed by strong inflows but remain vulnerable to the effects of rising real rates and tightening financial conditions [1][2].
CONCLUSION
CEE currencies are under pressure from global risk aversion and central bank policy signals, with potential for further weakness if key technical levels are breached. Meanwhile, LatAm equities continue to attract inflows, but analysts warn that higher real rates could eventually weigh on earnings and currency stability. Both regions face distinct but significant risks that could impact market performance in the coming months.