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CEE MARKETS-Forint stays on the back foot despite rate hikes

CEE MARKETS-Forint stays on the back foot despite rate hikes

Reuters · 07/28/2022 05:47
CEE MARKETS-Forint stays on the back foot despite rate hikes

- The forint found little relief on Thursday after the Hungarian central bank sharply raised its one-week deposit rate, as expected after a massive base rate hike this week, while other currencies flat-lined amid ongoing market jitters.

Central European currencies have been under pressure in the latest market souring, with energy prices and war in Ukraine weighing on outlooks.

Weakening currencies are complicating central bankers' work to tame surging inflation, especially in Hungary, where the central bank raised its base rate by 100 basis points to 10.75% on Tuesday, taking borrowing costs into double-digit territory for the first time since late 2008.

But the forint has been able to benefit, pressured by soaring gas prices and a risk-off international mood, traders and analysts say.

"Market participants were concerned about gas prices rising again, the worsening external balance, regional of war and the Fed's rate hikes," said Andras Horvath, senior analyst at Takarekbank.

The U.S. Federal Reserve lifted rates 75 basis points on Wednesday, as expected, but did alter its statement to cite some softening in recent data, leaving investors to expect a possible slowdown in the pace of hikes ahead.

That helped global stocks rally, boosting appetite for central European shares as well. But currencies still remained under pressure.

The forint EURHUF= fell 0.6% to 408.0 to the euro, still off a record low above 416 touched this month.

The Czech crown EURCZK= inched down 0.1%, with markets turning to the chances of whether interest rate hikes will continue as a revamped board meets on policy for the first time on Aug. 4. Its governor, Ales Michl, has opposed hikes and is pledging rate stability.

First, though, attention was turned to preliminary gross domestic product data due out on Friday, with a Reuters poll seeing a likely quarter-on-quarter decline as recession risks build.

Elsewhere, the Polish zloty EURPLN= was a tad stronger and Romania's leu EURRON= dipped. On stock markets, Czech lender MONETA Money Bank MONET.PR shares rose 0.4% after it posted a strong second quarter.




CEE MARKETS

SNAPSHOT

AT 1125 CET






CURRENCIES







Latest

Previous

Daily

Change




bid

close

change

in 2022

EURCZK=

Czech crown

EURCZK=

24.6000

24.5790

-0.09%

+1.11%

EURHUF=

Hungary forint

EURHUF=

408.0000

404.7500

-0.80%

-9.46%

EURPLN=

Polish zloty

EURPLN=

4.7885

4.7930

+0.09%

-4.12%

EURRON=

Romanian leu

EURRON=

4.9355

4.9306

-0.10%

+0.26%

EURHRK=

Croatian kuna

EURHRK=

7.5190

7.5135

-0.07%

-0.02%

EURRSD=

Serbian dinar

EURRSD=

117.2900

117.3500

+0.05%

+0.25%


Note: daily change

calculated from



1800 CET












Latest

Previous

Daily

Change





close

change

in 2022

.PX

Prague

.PX

1263.98

1260.2900

+0.29%

#VALUE!

.BUX

Budapest

.BUX

41760.09

41653.18

+0.26%

-17.67%

.WIG20

Warsaw

.WIG20

1674.16

1651.89

+1.35%

-26.15%

.BETI

Bucharest

.BETI

12539.17

12384.02

+1.25%

-4.00%

.SBITOP

Ljubljana

.SBITOP

1134.32

1129.25

+0.45%

-9.65%

.CRBEX

Zagreb

.CRBEX

1977.18

1976.88

+0.02%

-4.91%

.BELEX15

Belgrade

.BELEX15

833.96

835.20

-0.15%

+1.61%

.SOFIX

Sofia

.SOFIX

606.94

604.98

+0.32%

-4.52%











Yield

Yield

Spread

Daily




(bid)

change

vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

6.3750

-0.0100

+598bps

+1bps

CZ5YT=RR

5-year

CZ5YT=RR

5.0960

-0.0750

+440bps

-8bps

CZ10YT=RR

10-year

CZ10YT=RR

4.3420

-0.0420

+337bps

-7bps


Poland






PL2YT=RR

2-year

PL2YT=RR

6.9980

0.1470

+660bps

+16bps

PL5YT=RR

5-year

PL5YT=RR

6.2470

0.0550

+555bps

+5bps

PL10YT=RR

10-year

PL10YT=RR

5.8850

0.1060

+492bps

+8bps



FORWARD








3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

7.63

7.55

7.18

7.32


Hungary

HUFFRABUBOR=

13.38

13.43

13.13

11.96


Poland

PLNFRAWIBOR=

7.49

7.59

7.37

7.00


Note: FRA quotes

are for ask prices






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













(Reporting by Jason Hovet in Prague and Anita Komuves in Budapest; Editing by Alison Williams)

((jason.hovet@thomsonreuters.com))


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