We think CEE currencies are likely to reverse their gains

Exceptionally high inflation in the major economies of Central and Eastern Europe (CEE) relative to elsewhere has left their currencies overvalued against the US dollar and on a trade-weighted basis in our view. We think there is scope for these currencies to fall at least 10% against the greenback if, as we expect, risk sentiment deteriorates over the next couple of quarters.

In view of wider interest, this publication is also being sent to clients of the Emerging Europe service.