Nomura: The Czech Republic, Hungary and Romania face the risk of a currency crisis

Update: 21.11.2022 16:41

Tokyo – The Czech Republic, Hungary and Romania are facing a currency crisis next year due to growing budget and external problems. According to the agency Bloomberg this is what the analysts of the Japanese financial group Nomura Holdings predict in their report today.

The warning is based on an analysis of eight indicators, including the ratio of foreign exchange reserves to imports, short-term interest rates, and budget and trade indicators.

Vulnerabilities in emerging market currencies are now at their highest level in more than 20 years, according to the report. Analysts said that Egypt, Sri Lanka, Turkey and Pakistan have already experienced currency crises. At the same time, they pointed out that these countries are still facing problems.

This year, the Hungarian forint is one of the worst-performing currencies in emerging markets, disputes surrounding finances from European Union funds contributed to its sharp decline. The Czech crown and the Romanian lei have also weakened significantly this year.

As expected, the Banking Council of the Czech National Bank (ČNB) left the base interest rate at seven percent at the beginning of November. CNB Governor Aleš Michl stated after the bank board’s decision that the central bank will continue to prevent excessive fluctuations in the exchange rate of the koruna.

According to analysts, in September the CNB spent 2.6 billion euros (over 63 billion CZK) as part of interventions to support the koruna, and since May it has spent 25.5 billion euros (roughly 620 billion CZK). This is roughly 16 percent of foreign exchange reserves from their maximum volume in April this year.

Source: České noviny – hlavní události by

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