CEE Exchange Rate Analysis for May 07 – May 21

By: Quinnipiac University's Economics Research Team, Niamh M. Savage

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 May 7th show a clear decline in the value of all CEE currencies through the 15th of May. The largest initial decline was in the Polish Zloty (red line). The broad trend, on May 16th, was a considerable strengthening of currencies, followed by a weakening of currencies on May 17th. The largest variation was in the Hungarian Forint (green line) which rose initially but declined, with one-percentage point peak to trough. The Romanian Leu (yellow line) showed the least variation in percentage terms relative to other regional currencies.


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.


While the Polish Zloty (red line) displayed the largest change in percentage terms, and relative to its own historical levels, it did not deviate beyond it’s historical lows or highs. The Hungarian Forint (green line) is the only currency which remained outside its historical range throughout the time period, remaining persistently undervalued relative to trend.

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