CEE MARKETS-Crown extends gains supported by potential policy tightening in 2021
By Anita Komuves
BUDAPEST, Feb 5 (Reuters) - The Czech crown extended gains on Friday and hit its strongest levels since the start of the pandemic, a day after the central bank left its key policy rate unchanged and left the door open to the start of policy tightening later in 2021.
The Czech crown EURCZK= outperformed its regional peers and firmed 0.22% to 25.822 per euro after hitting an 11-month high in the previous session. The currency was bolstered by potential rate hike prospects this year, dealers said.
The central bank also said that longer-than-expected lockdowns to fight the pandemic could reduce the need to raise rates. The bank also raised its 2021 growth forecast to 2.2%.nL8N2KA5ML
This week's global risk-on mood driven by vaccine news and optimism over U.S. President Joe Biden's proposed $1.9 trillion stimulus package also helped CEE currencies, a Budapest-based FX trader said.
The Hungarian forint EURHUF= was flat, slightly weaker than its 200-day moving average around 355 per euro, a level that it strengthened to at the start of the week.
The Polish zloty EURPLN= edged up 0.08% to trade at 4.4973, stronger than the 4.50 level that economists say could trigger a central bank intervention.
A Reuters poll of analysts sees the zloty and the crown leading gains in the region this year as economies recover from the coronavirus pandemic.
However, analysts expect that an early leap in the forint to start 2021 may have run out of room: the forint was forecast to be barely moved from its current level. nL8N2KA5CY
Analysts, however, say that a faster vaccine rollout and faster economic recovery in Hungary could further support the forint.
Hungary's vaccination drive will accelerate and could potentially enable the country to ease coronavirus restrictions in April after Easter, Prime Minister Viktor Orban said on Thursday.
Orban said on Friday that Hungary may start inoculating people with Russia's Sputnik V COVID-19 vaccine next week. nL1N2KB0GJnL8N2KA37F
Hungary's industrial output rose by an annual 5.8% in December based on preliminary unadjusted data, exceeding analyst forecasts. nS8N2HV05A
Stocks in the region were stronger with Warsaw .WIG20 leading gains and adding 1.57%.
AT 1056 CET
Note: daily change
Note: FRA quotes
are for ask prices
(Additional reporting by Jason Hovet in Prague; Editing by Shailesh Kuber)
((firstname.lastname@example.org (+36 70 795 8815))
For related news and prices, click on the codes in brackets: All emerging market news EMRG CEEU CEE/ Spot FX rates Eastern Europe spot FX EEFX= Middle East spot FX MEFX= Asia spot FX ASIAFX= Latin America spot FX LATAMFX= Other news and reports World central bank news CEN Economic Data Guide ECONGUIDE Official rates GLOBAL/INT Emerging Diary EMRG/DIARY Top events M/DIARY Diaries DIARY Diaries Index IND/DIARY