Lira and CEE FX: Turkish Lira, Zloty, Forint — 2026-10-27
Turkey’s central bank cut rates to 36% on October 22, triggering a lira slide amid reserve concerns and a $18bn fund scandal. Meanwhile, the Polish zloty and Hungarian forint weakened against the dollar and euro as investors braced for Fed and ECB decisions, with the zloty hitting multi-year lows.
Lira and CEE FX: Turkish Lira, Zloty, Forint — 2026-10-27
Top developments
CBRT cuts rates to 36% amid reserve drain and fund scandal
The Central Bank of the Republic of Türkiye (CBRT) cut its one-week repo rate by 100 basis points to 36.0% on October 22, marking the first easing in nine months. This move was driven by September CPI falling below 30% year-on-year, though Commerzbank analysts warn that disinflation may not be genuine and that regional trends remain pro-inflationary. The decision occurred against a backdrop of a $18bn investment funds scandal, with local reports indicating a $15 billion drain in reserves since the fund liquidation began.
Zloty hits multi-year lows against dollar and euro
The Polish zloty depreciated significantly, with the USD/PLN rate reaching 3.95 PLN on October 27, the highest level since March 2025. The EUR/PLN pair also breached the 4.40 PLN threshold, driven by geopolitical tensions and energy price volatility. Analysts note that uncertainty surrounding the National Bank of Poland (NBP) and global "risk-off" sentiment are key drivers, with technical analysis suggesting further downside for the zloty.
Forint weakens ahead of central bank decisions
The Hungarian forint faced pressure, with the EUR/HUF rate rising above 367 HUF and USD/HUF reaching 329 HUF as the dollar rallied. Local media reports that the forint's weakness persists despite government announcements, with investors focusing on the upcoming 2027 budget and macroeconomic fiscal path. The currency's performance is also influenced by the broader "austerity" narrative and EU funds context, with analysts expecting volatility around the spring general election.
Local view
Turkish media, including Sözcü and Habertürk, highlighted that the CBRT's rate cut was the first in nine months, emphasizing the "cautious easing" stance in the decision text. BBC Türkçe quoted Professor Selva Demiralp, who noted the decision was made "in the shadow of the fund crisis". In Poland, Bankier.pl reported that the EUR/PLN breaking the 4.40 level opens the door for further zloty weakness, while Forsal.pl pointed to investor anxiety over NBP leadership uncertainty. Hungarian outlet Portfolio.hu described the forint as "squeezed" between a strong dollar and weak euro, with the "interest rate tsunami" of upcoming Fed and ECB decisions looming over the market.
Context & numbers
- USD/TRY: Held near 49.63 following the rate cut, with ING forecasting 51.50 by end-2026.
- EUR/PLN: Crossed 4.40 PLN on October 27, with USD/PLN at 3.95 PLN.
- EUR/HUF: Official MNB rate stood at 367.14 HUF on October 27, with USD/HUF at 329.51 HUF.
- Reserves: Turkish reserves reportedly fell by $15 billion due to the fund liquidation and interventions.
On the radar
- Fed and ECB Decisions: Markets are heavily focused on upcoming rate decisions from the Federal Reserve and European Central Bank, which are expected to significantly impact CEE currencies.
- Turkish Easing Cycle: ING expects further 100bp cuts in December, bringing the rate to 35% by year-end, while Commerzbank warns of depreciation risks.
- Hungarian Budget: Investors are watching the release of Hungary's 2027 budget plans and Q3 GDP data, which could sway forint sentiment.
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