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CEE MARKETS-Forint hits eight-week low as c.bank shifts rate hikes to lower gear

reuters.com · 09/24/2021 04:32
CEE MARKETS-Forint hits eight-week low as c.bank shifts rate hikes to lower gear

By Gergely Szakacs

- Hungary's forint EURHUF= hit an eight-week low against the euro on Friday, extending its losses for a third straight session, after the central bank slowed the pace of rate rises despite lifting its inflation forecasts.

At 0801 GMT, the forint was down 0.3%, leading losses in central Europe and giving up a large part of its gains posted this year.

The Hungarian and Czech central banks both started raising rates in June, boosting the forint and the crown EURCZK= by some 3% versus the euro ahead of Tuesday's Hungarian rate meeting, when the bank raised rates by a smaller-than-expected 15 basis points to 1.65%. nL8N2QN1TOnS8N2P200I

Despite raising its inflation forecasts for this year and the next, the National Bank of Hungary (NBH) said it would hike rates further in 15-basis-point steps, slowing the pace of tightening after three successive 30-basis-point hikes.

The forint fell over 1% versus the euro since Tuesday, paring its gains for the year to 1.6%. The crown's gains, meanwhile, still exceed 3% this year as the debate among Czech rate setters is shifting towards faster tightening. nL8N2QJ297

"The NBH is in a bind as it would need to continue raising rates due to high inflation, however, they cannot hike too much further as that could trigger a backlash," a currency dealer in Budapest said.

"The elections are coming, many people are indebted and big rate rises would probably not be good news for them," the trader said, adding that potential spillover risks from the Evergrande crisis and rising energy prices also weighed on sentiment.

Earlier on Friday, Hungarian Prime Minister Viktor Orban said he aimed to speed up an extra month of payment to pensioners as he ramped up a pre-election spending spree ahead of what promises to be a closely-fought ballot early next year. nL1N2QQ0CD

Last week, Orban also eased repayment rules for retail credit card loans and overdraft credit as part of an extended debt moratorium, making banks charge lower interest rates on such borrowing. nL1N2QI0C5

The Polish zloty EURPLN= fell 0.2% in early trade, while the crown was 0.1% weaker. Budapest stocks .BUX also underperformed the region with a 0.45% retreat as all blue-chip shares were mildly in the red.



CEE MARKETS

SNAPSHOT

AT 1001 CET






CURRENCIES







Latest

Previous

Daily

Change




bid

close

change

in 2021

EURCZK=

Czech crown

EURCZK=

25.4100

25.3940

-0.06%

+3.22%

EURHUF=

Hungary forint

EURHUF=

356.9500

355.7400

-0.34%

+1.62%

EURPLN=

Polish zloty

EURPLN=

4.6160

4.6080

-0.17%

-1.23%

EURRON=

Romanian leu

EURRON=

4.9505

4.9510

+0.01%

-1.73%

EURHRK=

Croatian kuna

EURHRK=

7.4938

7.4955

+0.02%

+0.72%

EURRSD=

Serbian dinar

EURRSD=

117.5100

117.6050

+0.08%

+0.05%


Note: daily change

calculated from


1800 CET












Latest

Previous

Daily

Change





close

change

in 2021

.PX

Prague

.PX

1308.80

1307.5500

+0.10%

+27.42%

.BUX

Budapest

.BUX

51714.47

51946.86

-0.45%

+22.82%

.WIG20

Warsaw

.WIG20

2316.17

2320.51

-0.19%

+16.74%

.BETI

Bucharest

.BETI

12476.35

12395.28

+0.65%

+27.24%

.SBITOP

Ljubljana

.SBITOP

1173.89

1163.61

+0.88%

+30.31%

.CRBEX

Zagreb

.CRBEX

1981.75

1976.03

+0.29%

+13.94%

.BELEX15

Belgrade

.BELEX15

799.68

798.71

+0.12%

+6.82%

.SOFIX

Sofia

.SOFIX

562.60

561.58

+0.18%

+25.71%











Yield

Yield

Spread

Daily




(bid)

change

vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

1.8960

0.0190

+258bps

+1bps

CZ5YT=RR

5-year

CZ5YT=RR

1.9770

0.0120

+255bps

+0bps

CZ10YT=RR

10-year

CZ10YT=RR

2.0010

0.0020

+223bps

-3bps


Poland






PL2YT=RR

2-year

PL2YT=RR

0.5750

-0.0620

+126bps

-7bps

PL5YT=RR

5-year

PL5YT=RR

1.5240

0.0320

+209bps

+2bps

PL10YT=RR

10-year

PL10YT=RR

2.0860

0.0520

+232bps

+2bps



FORWARD








3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

2.20

2.53

2.78

1.15


Hungary

HUFFRABUBOR=

2.18

2.36

2.50

1.74


Poland

PLNFRAWIBOR=

0.47

0.78

1.05

0.24


Note: FRA quotes

are for ask prices





**************************************************************



(Reporting by Gergely Szakacs; Editing by Rashmi Aich)

((gergely.szakacs@reuters.com ; https://twitter.com/szakacsg ; +36 1 882 3606 ; https://www.reuters.com/journalists/gergely-szakacs))

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