Oil embargo, PLN/HUF divergence, inventory boost

The EU's embargo on seaborne imports of Russian crude and petroleum products will be painful for Russia, but it won't be a disaster for as long as commodity prices remain high and Russia can export oil to Asia. Meanwhile, a rare divergence between the Polish zloty and the Hungarian forint has emerged, with the forint hitting a record low this week. This is likely to at least partly reflect Hungary's far-reaching interventionist approach to fiscal tightening and we wouldn't be surprised if the forint fell below 400/€ in the near term. We are sending this Weekly two days earlier than usual because Capital Economics’ London office is closed on 2^nd – 3^rd June for the Queen’s Platinum Jubilee celebrations.