WASHINGTON: The regional currencies saw rather a calm session yesterday despite the fact that Turkish assets were again under strong sell-off pressure. Even the zloty, which has recently been a good barometer of mood in emerging markets, has remained more or less stable. This may reflect not only the fact that worries about recent development in Turkey and its possible spillover effects remain low but also improving Polish fundamentals.
Data released yesterday confirmed the latter. Real retail sales have increased by 6.5 % Y/Y in June and echoed previous positive data from labour market. Let us recall that real wages in corporate sector increased by about 6% as well in June and employment growth was stronger than expected. Moreover, industrial production figures also came out in line with expectations. If we also take into account that Polish current account balance has been steadily improving, it seems natural that the zloty has been quite resistant to news from Turkey.
As for the fresh data on Czech PPI for June, they confirmed that (supply) inflation pressures in the Czech economy remain muted. The only hope for inflation therefore seems to be increasing wage pressures.
