FX Market Insights: Do You Know The Visegrad Four?

The Visegrad Four are not a gang of bank robbers from the 1930s…or the latest superheroes from Marvel.

The "V4" are an alliance of four central European states -- Hungary, Poland, the Czech Republic and Slovakia -- which cooperate on political, economic, cultural, energy and military issues. The origins of the V4 date back to a summit meeting in the Hungarian castle-town of Visegrad in 1991. All countries are NATO members and all joined the European Union on May 1, 2004.1

Despite the fact that all four Visegrad countries are members of the EU, Slovakia is the only V4 member to have adopted the euro as its official currency (in 2009). In the graph below, you can see that over the last eighteen months the Polish zloty, Czech koruna, and Hungarian forint have joined the euro in a weakening trend versus the US dollar. Within the group, the euro and Czech koruna have consistently outperformed both the Polish zloty and Hungarian forint.2


  • V4 growth has been impressive compared to the growth of its biggest trading partner, the eurozone. Notably, this is despite a sketchy record on political reform.
  • All are high-income economies, defined by the World Bank as countries with GDP per capita of $12,376 or more in 2018.3
  • Hungary and Poland have outperformed most other EU economies, at least partly through not adopting the euro.
  • Loose monetary policies in Hungary and Poland have supported growth without fueling inflation.
  • Interest rates in all V4 countries are lower than their respective inflation rates, producing negative real interest rates, which are typically unattractive to most global emerging market bond investors.
  • If counted as a single nation state, the Visegrad Four would be the fifth largest economy in Europe and the 12th largest in the world.4
Source: Bloomberg 2019

In terms of qualitative analysis, the V4 members are not all that dissimilar. All have investment grade sovereign debt5, and are ranked comfortably in the middle of various popular country assessment measures.

*Corruption Index = countries ranked between 100 (very clean/Denmark) and 0 (highly corrupt/Somalia) by perceived level of public sector corruption. Transparency International
^Competitiveness Ranking = assesses ability to provide high level of prosperity to their citizens; ranges from high 85 (Singapore) to low 35 (Chad). World Economic Forum
+Innovation Index = assesses business outcome of innovation and government's ability to support innovation through public policy, including tax incentives, immigration, education and intellectual property; ranges from high 67 (Switz) to low 14 (Yemen). Boston Consulting Group and National Association of Manufacturers


The economic performance of the Visegrad Four has been fairly strong and country qualitative assessments are fine. However, expect further currency depreciation over the coming months, as above trend growth and slightly elevated inflation will not offset negative real yields and a generally strong US dollar.

  1. en.wikipedia.org
  2. Bloomberg, December 2 2019
  3. blogs.worldbank.org
  4. Deutsche Welle. "Visegrad Group: A new economic heart of Europe?", July 5 2019
  5. www.moodys.com

This article is intended for US audiences only.

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About the Author

Scott Petruska is Chief Currency Strategist and senior advisor for Silicon Valley Bank’s global financial services group, and is based in Boston, MA. He advises clients on currency and interest rate hedging strategies, and helps them with other aspects of global banking. He regularly writes blogs on topics covering the global financial markets, conducts client seminars and webinars, and speaks at regional financial conferences.

Petruska has more than 30 years experience in the currency and interest rate markets, and has lived and worked in Boston, Chicago, New York City, Singapore and Tokyo. Prior to joining SVB in 2009, he worked at several large international financial institutions, including National Westminster Bank, Irving Trust, Bank of New York, State Street Bank and Commerce Bank. He has been an institutional trader, product developer, analyst, salesperson and advisor.

Petruska has been awarded several professional designations, including the CFA (Chartered Financial Analyst), FRM (Financial Risk Manager) and CMT (Certified Market Technician). He earned his undergraduate degree in Finance & Banking from the University of Wisconsin.