Currency markets in Central and Eastern Europe are being shaped by widening monetary policy divergence, with the Czech koruna outperforming regional peers and the Hungarian forint facing a nuanced outlook as its central bank continues an easing cycle. According to a note from Commerzbank, the koruna's strength against the euro is closely tied to the Czech National Bank's cautious approach to interest rate cuts, which contrasts with more aggressive easing expectations in Poland and Hungary.
As of mid-June, the Czech National Bank's policy rate stands at 5.25%. The bank has signaled a data-dependent stance, maintaining a slower pace of rate reductions than the Polish and Hungarian central banks. This has widened interest rate differentials in favor of the koruna, attracting foreign capital and supporting the currency. Commerzbank notes that the koruna has become an attractive carry trade target, though it warns that an overly strong currency could weigh on export competitiveness in the Czech Republic's manufacturing-heavy economy.
Meanwhile, BNY has published an analysis of the Hungarian forint, focusing on the Magyar Nemzeti Bank's easing cycle and its implications for carry trade appeal. The Hungarian base rate has been reduced from a peak of 13% in 2022 to 6.5% as of early 2025. BNY suggests that while easing typically pressures the forint, its carry appeal may persist if the MNB's cuts remain gradual and inflation stays under control. However, any surprise acceleration in rate cuts could trigger capital outflows and currency depreciation.
Both reports highlight how central bank communication and rate paths are increasingly driving currency performance in the CEE region. For investors, the divergence creates opportunities in carry trades but also demands active hedging of currency risk. The situation remains fluid, with future economic data and policy signals likely to determine whether the koruna's leadership continues and whether the forint can maintain its appeal.
