With the ongoing Russian invasion of Ukraine causing economic turmoil, the European Union has been significantly impacted, especially in eastern Europe. This situation has led to a weakening of the euro, which not only poses economic challenges but also raises concerns about a potential recession that could impact other major currencies in Europe.
Today, traders showed reluctance in dealing with various key European currencies such as the Hungarian forint, Polish zloty, and Czech koruna. Currently, the only currencies less favored by traders are the Russian ruble and Turkish lira.
Paul Greer, a money manager at Fidelity International, expressed caution regarding eastern European currencies, stating that this region is particularly vulnerable within emerging markets in the currency sector.
“We are cautious and negative on eastern European currencies,” said Paul Greer. According to Piotr Matys, a senior currency analyst at InTouch Capital Markets, Europe’s vulnerability suggests that the central and eastern currencies might underperform, especially if the euro weakens against the dollar.
In response to these challenges, EU countries have implemented various monetary policies and increased global export rates to support the euro and other currencies. However, these efforts have placed a significant strain on resources. If the euro enters recession territory, it is likely that currencies like the forint, zloty, and koruna will also be affected.
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