FXStreet (Delhi) - Research Team at Societe Generale, suggests that amid the speculation of decisive ECB action as early as December, we remain constructive on selected CEE markets due to relatively tighter correlation to EUR rates, more policy room, benign fundamentals and better backstops to fend off headwinds to risk sentiment.
Key Quotes
“We see potential for CEE FX strength against EUR, though regional central banks’ likely reassessment of their monetary policy stance may cap appreciation.”
“We think that more ECB QE would have limited impact for CEE eurodenominated bonds, except for the Balkan countries and Romania which are trading cheap to the USD curve.”
“The extension of QE would provide a powerful backstop against the downside, however, and would propel the EUR primary bond market.”
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