Similar but Different

This work examines the currency developments in the Visegradcountries (the Czech Republic, Hungary, the Slovak Republic, and Poland). It is shown that despite the fact that these countries aresimilar in terms of the macroeconomic indicators, they havedifferent currency developments, namely the long-term strengthening of the Czech and the Slovak korunas and a lack of this strengthening in the Hungarian forint and the Polish zloty. Iinvestigate what stands behind these different exchange rate developments. Several determinants of the exchange rate are studiedfor the period of 1999 to 2006, namely Consumer Price Index, interest rates, balance of payments, current account, foreigntrade, state budget, and the foreign (external) debt. By acomparative analysis, I find that the Czech koruna is influence dpositively by all these factors, the Slovak koruna is also influenced positively, except for CPI and current account. However,the forint and the zloty are mostly influenced negatively bythe sedeterminants. This explains, at least partially, why the Slovak and the Czech koruna show a trend of appreciation, while this trend in lacking in the zloty and the forint.