By: The Quinnipiac University Economics Research Team, Niamh 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 starting May 31st show a clear incline in the value of all CEE currencies. The largest increase, at the end of the period, was in the Czech Koruna (blue line); this shows a strengthening of the domestic currency. The Romanian Leu (yellow line) showed the least variation in percentage terms relative to other regional currencies, and it ended with the smallest increase. Therefore, its domestic currency strengthened, but by a comparably less amount than the other countries.
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.
During this time period, the Czech Koruna, Polish Zloty, and Romanian Leu ended outside of their historical range. The Czech Koruna began below its lower boundary, and it ended above its upper boundary mark. The exchange rates for the Polish Zloty and the Romanian Leu began in the upper end of their historical range, and they increased beyond their county’s upper boundary. Both ended more than two standard deviations higher than their 3-month average, which is significant in both statistical and analytical terms generally. Such a large and persistent increase, should it continue to persist, will begin to have an effect on the trade balances of these countries as their products become relatively more expensive in world markets. The Hungarian Forint is the only currency which remained within its historical range throughout the majority of the time period.