Forex - Emerging Europe Closing Summary and Highlights 9 Jan

 16:46 (GMT) 09 Jan

  [Forex Highlights]

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Emerging Europe Closing Summary and Highlights 9 Jan (0101-HHNS-C01)


Most Polish government bond yields decreased by up to 4bps on Wednesday and the zloty continued to suffer, with the EUR/PLN temporarily rising to 4.3002. The currency was hurt by comments from MPC members at the press conference, with NBP Governor Adam Glapinski saying that stability in interest rates "could last beyond 2019 and 2020", perhaps even until the end of the current MPC term, adding that the Bank was ready to "use any unconventional measures being used in the West". In addition, MPC member Jerzy Zyzynski said that the NBP might have to lower interest rates "if the German economy stays weak".


While most Russian government bond yields decreased by 5-24bps on Wednesday, the ruble remained vulnerable with the USD/RUB briefly rising to 67.2335. The currency was hurt by expectations of the resumption of FX purchases by the CBR from January 15 as well as reports that seven new Democratic leaders of the U.S. House committees called on President Donald Trump to defer the easing of sanctions against Rusal, En+ and EuroSibEnergo that are linked to billionaire Oleg Deripaska.


On Wednesday, South African assets gained on reports of advances in trade talks between the U.S. and China as well as relatively dovish comments by the Fed's Raphael Bostic, with the USD/ZAR temporarily falling to 13.864 and government bond yields decreasing by 3-4bps across the curve.


While the Turkish two-year government bond yield fell by 26bps on Wednesday to 18.68%, the lira continued to underperform other EMEA currencies with the USD/TRY briefly climbing to 5.5446. The currency still suffered from comments by President Tayyip Erdogan, who said on Tuesday that the Turkish army would soon act to "neutralize terror" in Syria, adding that contrary to the comments by U.S. National Security Adviser John Bolton, neither PYD nor YPG could not represent Kurds in Syria. Furthermore, Treasury and Finance Minister Berat Albayrak announced that the CBRT would transfer TRY 37bn of profits to the Treasury, in the most blatant manifestation of the Bank's politicization since the August lira crisis.

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