PLN: Government reiterates defence against Greek spillover

The Polish zloty, along with the forint, featured among top underperformers of the past week as developments surrounding Greece escalated, the underperformance reflects the hi-beta nature of the currencies, which manifests during 'contagion' events, more than any fundamental linkage. 

Both Polish and Hungarian governments have come out to emphasise that their economies are well insulated and that direct exposure to Greece is minimal. Our own analysis confirms that Poland and Hungary are minimally exposed to Greece.

Within CEE, the larger exposures are in Bulgaria, Romania and Macedonia, while Turkey has some limited banking exposure. Polish PM Kopacz strongly stated yesterday that Polish banks are in stable condition with large capital buffers, and that the Finance Ministry and CenBank are standing by to intervene in the FX market, if required, to limit contagion.

Poland even plans to go ahead with its forthcoming bond auctions on 9 July. 

"This kind of volatility is seen as unavoidable for the zloty, but EUR-PLN average 4.15 through year-end despite periodic setbacks", forecasts Commerzbank.