EUR/PLN: Zloty hit by risk-off mood
• The zloty weakened as the US-Iran conflict re-escalated and concerns about Russian hybrid warfare in Europe fuelled a risk-off mood. EUR/PLN recently rose towards 4.35, but we expect the move to be short-lived.
• Although we do not share the market’s expectations of interest rate hikes in Poland in the coming months, those bets prevent the zloty from the negative impact of external factors.
• Our mid-term view on the zloty remains unchanged. Expect a limited rise in €/USD in 2H26; sustainable GDP outperformance of regional peers and expected inflows of EU funds justify slightly lower levels of the €/PLN exchange rate.
Source: Refinitiv, ING Forecasts
EUR/HUF: The gloomy days won’t last too long for the forint
• With the HUF having outperformed peers and experienced a one-sided market since April, a correction was inevitable. However, we believe that the outlook remains positive.
• The Monetary Council is rightfully non-committal in the current environment. On the one hand, the inflation outlook is much better than the central bank anticipated in June. However, unfavourable developments in risk premiums and energy prices counterbalance this. As a result, markets are pricing in only a small chance of further rate cuts.
• We believe that a brief pause in the easing cycle and some calmness in global markets could see the EUR/HUF move back to 360 or even lower. This is especially likely if the inflation target review and the medium-term budget plan, both of which are due in autumn, are credible.
Source: Refinitiv, ING Forecasts
EUR/CZK: Koruna’s main advantage will lose its lustre
• A positive interest rate differential in both nominal and real terms has given the koruna a significant advantage over the euro in recent years. This advantage has intensified since late 2024 in real terms, reaching 2.6 percentage points in August.
• The Czech real interest rate has averaged 1.8% so far this year, while the eurozone real interest rate has remained negative since March. However, the expected pickup in Czech headline inflation is set to push the real yield close to zero early next year, reducing the koruna’s leading advantage.
• Add the somewhat disappointing economic performance over 1H26, and you can conclude that the koruna is no longer poised for any substantial appreciation as it saw in 2025. The currency will hold its current value, while a gradual strengthening trend is subject to a stronger economic rebound.
Source: Refinitiv, ING Forecasts
EUR/RON: Pressures could amplify in the near term
• EUR/RON moves have amplified slightly over the past month but have nevertheless remained contained in the 5.23-5.26 range. With the upcoming S&P rating decision due on 2 October, rating worries have been mounting. Positively, the budget deficit stood at 2.34% of GDP as of July 2026 (vs 3.99% in July last year), a key positive factor supporting Romania’s credit story.
• That said, the main development to watch remains the push for a fully empowered government committed to fiscal consolidation. After narrowly escaping a downgrade in the summer, our base case is that Romania will maintain it provided a solid governance deal is sealed soon.
• We expect the pair to remain within its current range and close the year near 5.25.
Source: Refinitiv, ING Forecasts
EUR/RSD: No major changes expected in the coming months
• EUR/RSD has continued to trade mostly sideways in the range of 117.3–117.4. Importantly, the US Treasury’s OFAC has extended the operating waiver for Serbia’s NIS refinery until 30 September, as the deal with MOL is in its final stages.
• The recent fiscal expansionary measures led to a revision of the deficit from 3.0% to 3.5% of GDP in 2026, mainly reflecting higher social expenditure. That said, from a macro imbalances standpoint, Serbia’s position remains robust at this stage.
• At its August meeting, the National Bank of Serbia kept the key rate in place at 5.75%, noting that uncertainty remains elevated despite a better inflation outlook. Between January and July, the Bank sold €320m to keep the pair stable – we expect FX stability to remain in place.
Source: Refinitiv, ING Forecasts
USD/UAH: Hryvnia strengthens despite headwinds
• Even as the US dollar strengthened globally amid a more hawkish Fed, a renewed escalation in the Middle East and the ongoing war in Ukraine, the hryvnia managed to appreciate slightly.
• The hryvnia was supported by near-record FX interventions by Ukraine’s central bank during the summer, and by July’s 50bp rate hike to 15.5%, which strengthened the currency’s resilience in an increasingly adverse external environment.
• According to National Bank of Ukraine minutes, most rate-setters believe that rates will need to be raised further this year. However, the outlook for the hryvnia remains cloudy as the macroeconomic environment remains challenging.
Source: Refinitiv, ING Forecasts
USD/KZT: High real rates favour continued carry-trade
• Contrary to our cautious expectations, the tenge appreciated to USD by 3% in August, and 5% during the summer months – despite oil flow disruptions and the decline in state support to the domestic FX market.
• In August, the combined net FX sales by quasi-sovereigns, the oil fund and the central bank dropped to $0.3bn vs. $1.7bn in May, while net foreign inflows into state bonds stopped after $0.3-0.5bn inflows in June and July.
• The growing role of private capital flows has increased the KZT’s reliance on carry trades, which is currently supported by high real rates which are likely to remain. Meanwhile, in the longer run, appreciation should be limited by structural factors.
Source: Refinitiv, ING Forecasts
USD/UZS: Supported by portfolio flows and restart of gold exports
• The soum showed 1% appreciation to USD in August after a relatively flat first two months of the summer. This was likely supported by the restart of gold exports, which totalled $1.3bn in July.
• Between January and July, Uzbekistan exported only 18mt of gold vs. 85mt for the full-year 2025, suggesting scope for a pickup in the rest of the year, keeping us constructive on the current account and USZ prospects.
• Portfolio inflows are also likely to continue, as despite the recent indication from the central bank that the nominal policy rate of 14.00% may be lowered by year-end, the real rates are likely to remain attractive, given the 6.4% CPI.
Source: Refinitiv, ING Forecasts
USD/TRY: Recovery in flows, moderation in growth
• Foreign investor positioning has recovered from the US-Iran conflict shock, with long TL positions in FX swaps exceeding pre-war levels. However, bond inflows have remained modest. Meanwhile, TL deposit inflows continued, while the sector’s dollarisation ratio fell from 39.9% in May to 38.5% by late August. Gross reserves reached US$188.2bn.
• High borrowing costs and tighter macroprudential measures are contributing to a deeper slowdown in 2Q GDP growth. We expect the economy to maintain moderate growth in 2H26, although risks surrounding our 3.0% full-year GDP growth forecast have increased.
• Recently the central bank took a step to normalise liquidity by resuming repo auctions. Effective funding costs fell from 40% to the policy rate at 37%. The CBT is likely to remain on hold in September, but cut by 200bp to 35% in the last quarter.
Source: Refinitiv, ING Forecasts
USD/ZAR: Holding its own
• The rand is enjoying a strong quarter and is the third-best performer in the EMFX space. It does tend to benefit from the dollar debasement trade, where the pick-up in gold and precious metals tends to be ZAR-supportive. It also performs well in the low-vol carry trade environment, where 6.5% implied yields remain attractive. Here investors think the South African Reserve Bank will need to hike again over the coming quarters.
• Notably, South Africa’s sovereign CDS continues to decline, implying a rating closer to BBB than its current BB. Domestic reforms in energy, logistics and fiscal are being welcomed.
• Stronger ZAR gains will probably come in 2Q27, when $ rates drop.
Source: Refinitiv, ING Forecasts
USD/ILS: Low inflation allows rate cuts, weaker shekel
• Low inflation allowed the Bank of Israel to cut rates again in early September, with the policy rate now at 3.25%. That compares to 4.00% at the start of the year. If money markets are to be believed, investors expect some further aggressive rate cuts over the coming months – potentially taking the policy rate closer to 2.00%. For reference, three-month implied yields stand at 2.40%.
• FX buying intervention earlier in the year, rate cuts and what should now be at least one Fed hike should serve to keep USD/ILS above 3.00 now – which is the BoI preference.
• We also think the shekel is one of the most closely correlated currencies to the tech boom, so any correction here can weigh.
Source: Refinitiv, ING Forecasts
Source: ING
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