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CEE MARKETS-Forint weakens after PM Orban flags possible extension of fuel price cap

reuters.com · 06/10/2022 04:57
CEE MARKETS-Forint weakens after PM Orban flags possible extension of fuel price cap

By Anita Komuves

- The Hungarian forint weakened on Friday, underperforming regional peers, after Prime Minister Viktor Orban said that price caps on fuel, some basic foods and energy could stay in place for a longer period if the war in Ukraine is entrenched.

Orban's government set a limit on fuel prices in mid-November and followed up with caps on some food staples in February. The measures are due to expire next month. nL1N2XX09Y

"Orban saying that the fuel price cap could be extended when the EU has already started to challenge it, that's not helpful to the forint," an FX trader in Budapest said.

EU industry chief Thierry Breton on Wednesday told Hungary to suspend discriminatory fuel pricing against vehicles with foreign licence plates or risk being taken to court. nL1N2XV1OA

The forint EURHUF= was 0.55% lower and trading at 398.15 per euro, extending its losses from the previous sessions.

The currency was weakened earlier this week by higher-than-expected inflation data with added pressure from a central banker who said on Wednesday that the bank will stick to a slower pace of rate rises. nL1N2XV14D

Elsewhere, currencies were little moved as fresh inflation data confirmed that price pressures around central Europe stayed strongly on the upside.

Headline inflation in the Czech Republic surged to 16% in May, backing expectations that the central bank board will sharply raise rates when it meets a final time under its current composition on June 22. nP7N2W600T

"Stronger pro-inflationary factors suggest the CNB will... continue to raise interest rates by at least 1 percentage point," Jakub Seidler, chief economist of the Czech Banking Association said.

In Romania, the leu EURRON= edged down 0.03% to 4.9445 per euro after data showed headline inflation hitting 14.5%, near a 20-year high. nS8N2WU075

Analysts expect the central bank to hike its benchmark interest rate by 75 basis points to 4.50% at its next meeting on July 6.

The zloty EURPLN= was mostly stable after it slipped in the previous session as the central bank governor said Poland was approaching the end of the tightening cycle and warned of slowing growth. nL1N2XW1HP

"The mild rhetoric of the NBP governor and the strengthening of the dollar in the core markets increases the negative pressure on the zloty," Bank Millennium wrote.





CEE MARKETS

SNAPSHOT

AT 1036 CET






CURRENCIES







Latest

Previous

Daily

Change




bid

close

change

in 2022

EURCZK=

Czech crown

EURCZK=

24.7000

24.6900

-0.04%

+0.70%

EURHUF=

Hungary forint

EURHUF=

398.1500

395.9500

-0.55%

-7.22%

EURPLN=

Polish zloty

EURPLN=

4.6025

4.6000

-0.05%

-0.25%

EURRON=

Romanian leu

EURRON=

4.9445

4.9430

-0.03%

+0.07%

EURHRK=

Croatian kuna

EURHRK=

7.5220

7.5205

-0.02%

-0.06%

EURRSD=

Serbian dinar

EURRSD=

117.3900

117.3900

+0.00%

+0.16%


Note: daily change

calculated from


1800 CET












Latest

Previous

Daily

Change





close

change

in 2022

.PX

Prague

.PX

1339.02

1345.0700

-0.45%

#VALUE!

.BUX

Budapest

.BUX

39369.54

39663.15

-0.74%

-22.38%

.WIG20

Warsaw

.WIG20

1744.38

1767.50

-1.31%

-23.05%

.BETI

Bucharest

.BETI

12486.29

12480.00

+0.05%

-4.40%

.SBITOP

Ljubljana

.SBITOP

1173.46

1178.24

-0.41%

-6.53%

.CRBEX

Zagreb

.CRBEX

2099.63

2102.50

-0.14%

+0.98%

.BELEX15

Belgrade

.BELEX15

829.54

830.51

-0.12%

+1.07%

.SOFIX

Sofia

.SOFIX

619.55

620.31

-0.12%

-2.54%











Yield

Yield

Spread

Daily




(bid)

change

vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

6.1150

0.1010

+528bps

+9bps

CZ5YT=RR

5-year

CZ5YT=RR

5.5550

0.1150

+437bps

+13bps

CZ10YT=RR

10-year

CZ10YT=RR

5.4490

0.1130

+405bps

+15bps


Poland






PL2YT=RR

2-year

PL2YT=RR

6.9100

-0.0810

+607bps

-9bps

PL5YT=RR

5-year

PL5YT=RR

7.2500

0.0220

+606bps

+4bps

PL10YT=RR

10-year

PL10YT=RR

7.0190

0.0730

+562bps

+11bps



FORWARD








3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

7.20

7.20

7.14

6.32


Hungary

HUFFRABUBOR=

8.26

8.72

9.03

7.05


Poland

PLNFRAWIBOR=

7.61

7.70

7.68

6.76


Note: FRA quotes

are for ask prices





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






(Additional reporting by Alan Charlish in Warsaw, Luiza Ilie in Bucharest and Jason Hovet in Prague; Editing by Shailesh Kuber)

((komuves.anita@thomsonreuters.com)(+36 70 795 8815))

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