Got a loan? You can breathe easy, at least for now…
As Poslovni Dnevnik writes on the 23rd of February, 2018, Croatia’s national currency has strengthened considerably against the euro, the kuna’s daily liquidity surplus is approaching the level of 28 billion kuna, maintaining interest rates at historically low levels, which is welcome news for anyone with a bank loan.
On Monday, the middle exchange rate of the domestic currency was 7.43 kuna for the euro and the kuna was the strongest it has been in the past six years. Between 2012 and 2017, on every February the 19th, the exchange rate of the kuna against the euro was above 7.5 kuna, ranging from 7.52 to 7.67 kuna per euro. On the same date last year, the euro was supposed to amount to 7.52 kuna at the middle exchange rate of the Croatian National Bank (HNB/CNB).
It is customary and very much the norm for the Croatian domestic currency to weaken during winter, with spring on its way, and of course, in summer it is the strongest because of the touristic demand for the acquisition of the Croatian kuna, but with the departure of those tourists and their foreign currency, it naturally starts to lose that effect. However, these unwritten rules that have become the accepted norm have somehow changed over the last couple of years.
“The trend of the strengthening of the kuna has been present since the beginning of 2015. This should be linked to the fact that the situation on the European financial market has improved as a result of the measures taken by the European Central Bank. During that time, the economic situation in Croatia improved too, the external imbalances were significantly reduced, primarily related to the realisation of surplus on the current account of the balance of payments, as a result of the [success of the] tourism sector and the growth of exports in the years following [Croatia’s] accession to the European Union. The recent impact on the kuna is a reduction of the risk premium, or, risk perception when we’re talking about Croatia. For this year, I expect the trend of the slight strengthening of the kuna on an annual basis to hold, with the expectation that the central bank will continue to mitigate interventions on the foreign exchange market,” stated Zdeslav Šantić of OTP Splitska banka to Slobodna Dalmacija.
Raiffeisenbank analysts have predicted that by the end of this quarter, we can expecting a trading range of between 7.40 and 7.46 kuna for the euro. However, they warn, possible slow pressures on inflation growth, with the expected tightening of the monetary policy in the eurozone, warns of the potential need to tighten liquidity, but that will only become a concern much more towards the end of this year.
