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Exchange rates in Eastern Europe weaken again under Corona

D.he corona epidemic is affecting many countries in Eastern and Southeastern Europe more in its current second wave than in spring. The consequences are not as severe everywhere as in Ukraine, where the health minister saw the medical system at the limit of its capacity last week. In the Czech Republic, one of the countries with the highest number of new infections in Europe, the government has closed schools and restaurants. This is not yet affecting companies – but rising corona numbers on the markets are increasing concerns about the economic consequences. This can be seen in the exchange rates. The Czech crown has lost almost five percent of its value since mid-August and is not far from corona weddings at 27.36 crowns per euro.

Analysts are already expecting a deeper slump in growth in their forecasts, such as Jakub Seidler from ING-Bank, to 7.5 instead of 6.5 percent. Commerzbank expert Melanie Fischinger sees the crown as being “in the grip of the second wave”. “The new restrictions could put a longer strain on the service sector in particular.” Nonetheless, she expects the national currency to stabilize slightly against the euro and dollar. Erste Group Bank does not expect another rate hike by the central bank until the end of next year, instead of in late summer 2021.

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