CEE Exchange Rate Analysis for April 11 - 26

By: Quinnipiac University's Economics Research Team, Bryan Doherty

Source: Eurostat and own calculations. Exchange rates are inverted to be EURO per local currency (i.e., an increase indicates a stronger domestic currency) and then indexed to be 100 at the start of the period.


The currency trends for the ten-day period starting April 11th were diverse to say the least. Relative to the Euro, the Hungarian Forint and Polish Zloty strengthened for the first half of the period while the Czech Koruna weakened. While the Czech Koruna weakened overall the divergence across currencies disappeared to some degree as the Forint and Zloty also weakened against the Euro by the period’s end. The Romanian Leu remained largely unchanged. Overall, none of the currencies changed much in percentage change terms during the period. Even the Hungarian Forint, which showed the most movement, only changed peak-to-trough by less than 1%.


HISTORICAL TRENDS

Source: Eurostat and own calculations. Exchange rates are inverted to be EURO per local currency (i.e., an increase indicates a stronger domestic currency). The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.


The details of each currency’s movement can be seen a little more accurately relative to their own historical trends. While the Hungarian Forint displayed the largest total change in percentage change terms (see Index above), it hovered below its 3-month average but only barely fell below its lower bound suggesting that these changes were indeed mild overall.


The Czech Koruna starts near its upper bound and approaches its lower bound before approaching its average level from below by week’s end. Moving from upper to near the lower bound is almost a full 2 standard deviation change during this period. This is a much more significant movement for the Czech Koruna than implied by merely looking at the percentage change above.


While the Polish Zloty ends near its average, it too moved nearly 2 standard deviations, peak-to-trough. Again, suggesting its movement was more significant relative to its historical trend than the percentage change above indicated.


In both cases, relative to the movements of the regional currencies (i.e., the Index analysis and percentage changes) their movements were small, but relative to their own trends, they were more significant.


The Romanian Leu was very subdued, remaining largely flat and near its lower historical bound. Perhaps the lack of movement was simply an indication of low market activity in the buildup to the Orthodox Easter holiday period which started Friday, April 26.


The Data: Euro per Domestic Currency

Source: Eurostat and author’s own calculations.

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