Investors have started cashing in on recent gains, leading to a retreat of the Czech crown from a 15-year high against the euro, causing other central European currencies to follow suit.
The hawkish comments made by the Czech central bank recently had supported the Czech currency, which had closed at its strongest point since July 2008 on Thursday.
Similarly, the Polish zloty had ended Thursday at its highest level since late December, and over the past three days, it had gained nearly 1%. However, Bank Pekao economist Piotr Bartkiewicz noted that investors are looking to profit from their positions, making exiting aggressive bets an attractive option. As a result, the zloty has become expensive in relation to other currencies, making it increasingly difficult for it to gain in the next few days and weeks.
The Czech crown and Polish zloty were down 0.42% and 0.22%, respectively, while the Hungarian forint was also down by 0.23%. CSOB suggested that the hawkish comments made by the central bank could be a communication weapon to dissuade markets from betting on a premature decline in interest rate cuts, possibly to help the crown. Photo by ТамараГончарук, Wikimedia commons.