Already heavily affected by the war in neighboring Ukraine, the economy and, accordingly, the currencies of its countries Eastern Europe they are under renewed pressure as recession threatens the eurozone, with which they are closely linked. Hungarian Forint, Polish Zloty and Czech Koruna are under the strongest pressure of all currencies of developing countries, if they are excluded of course Russian ruble and Turkish lirawhich require special care in investors. The picture is emerging from data compiled by Bloomberg, while Goldman Sachs Group, Fidelity International and InTouch Capital Markets believe that Eastern European economies and securities will be hit hardest of all emerging markets if the euro continues to weaken.

The currencies of the three countries are considered the most vulnerable in the event of a recession in the eurozone.

The currencies of the three Eastern European countries are considered the most vulnerable in the event of a recession in the eurozone, since 60% of their countries’ imports are absorbed by the 19 euro member states and a depreciation of the euro will lead to a drop in demand for their products. After all, they have already been offended, since since the beginning of the war in Ukraine, everyone has been underestimated. The forint depreciated 17% against the dollar, the zloty 12% and the Czech koruna 9.5%. The close association of these currencies with the euro means that they could be hit hard if the single currency weakens further. So far, Hungary has raised interest rates aggressively, providing key support to the forint after it fell to record lows against the euro last month. In addition, the forint was hit by the fact that Prime Minister Viktor Orban has not yet secured the country’s access to the Recovery Fund. In Poland, the authorities have made more progress in negotiations with the Commission on access to the Recovery Fund. Meanwhile, the country’s central bank is preparing to end a series of interest rate hikes that have pushed the key rate up to 6.5%, when the Hungarian equivalent stands at 10.75%. The most stable of all is the Czech koruna, mainly due to central bank interventions in foreign exchange markets. Last week, the monetary policy authority kept the key interest rate unchanged at 7%, in line with the central bank governor’s announced plan to stop rising borrowing costs.

According to Oliver Harvey, head of currency research for Central and Eastern Europe, the Middle East, Africa and Latin America at Deutsche Bank, the picture for the region is mixed with mixed positives and negatives. There are concerns about the Hungarian economy and this has negatively affected its currency, while the krone is expected to weaken against other currencies in the region and the Czech Republic will lose its competitiveness, phasing out interventions. A pullback of the euro below 1:1 against the dollar will certainly determine the fate of these currencies.