CEE MARKETS-Crown regains some ground as other currencies sputter
By Boldizsar Gyori and Jason Hovet
BUDAPEST, Sept 15 (Reuters) - Central European currencies were subdued on Friday, as a stronger dollar weighed on the region after the European Central Bank's (ECB) latest interest rate hike, although the Czech crown clawed back some recent losses.
Currencies have witnessed heavy losses so far in September due to a shock Polish interest rate cut last week which has weighed on the region, especially the crown as investors raised bets that Czech rates could soon begin falling, too.
The ECB hiked its key rate to a record 4% on Thursday, having the dual effect of the interest rate differential with central Europe and giving the dollar a lift as markets took it as a "dovish hike".
Hungary's forint EURHUF=, which has held in a range despite September turbulence in the region's markets, was flat at 383.50 to the euro at 0842 GMT, with traders expecting range-trading to continue.
The crown EURCZK=, on the other hand, added 0.5% to 24.451 to the euro, gaining some ground after trading as low as 24.645 this week.
"Somebody is selling long (euro) positions back before the end of the week," a local trader said.
The Polish zloty EURPLN= has been in rapid descent since Polish rate-setters unexpectedly slashed borrowing costs by 75 basis points last week, trading as low as 4.692 to the euro.
It got a boost on Wednesday when a government adviser said Poland had the tools to prop up the currency. On Friday, it edged 0.1% higher to 4.6345 to the euro.
"The strengthening effect of statements we heard two days ago... is probably running out. Possibly, the market that worrying was happening regarding potential interventions, just verbal ones," Bank Millennium financial market analyst Mateusz Sutowicz said.
He added that range-bound trading around the 4.64 per euro level was the base scenario for the zloty for the rest of September, but pointed out that a potential rate hike by the U.S. Federal Reserve week could weigh on sentiment towards the currency.
Analysts have forecast a weakened outlook for central European currencies in the coming year, as rate cuts take effect and the rate differential that has so far helped draw investors.
The region's economies are also looking at sluggish recoveries after high inflation of recent years cut consumer activity and weighed on factories.
CEE MARKETS | SNAPSHOT | AT 1042 CET | ||||
CURRENCIES | ||||||
Latest | Previous | Daily | Change | |||
bid | close | change | in 2023 | |||
EURCZK= | Czech crown | EURCZK= | 24.4510 | 24.5750 | +0.51% | -1.20% |
EURHUF= | Hungary forint | EURHUF= | 383.8500 | 383.8500 | +0.00% | +4.06% |
EURPLN= | Polish zloty | EURPLN= | 4.6345 | 4.6380 | +0.08% | +1.19% |
EURRON= | Romanian leu | EURRON= | 4.9695 | 4.9710 | +0.03% | -0.54% |
EURRSD= | Serbian dinar | EURRSD= | 117.1300 | 117.2150 | +0.07% | +0.15% |
Note: daily change | calculated from | 1800 CET | ||||
Latest | Previous | Daily | Change | |||
close | change | in 2023 | ||||
.PX | Prague | .PX | 1354.14 | 1356.2200 | -0.15% | +12.68% |
.BUX | Budapest | .BUX | 57666.84 | 57689.26 | -0.04% | +31.68% |
.WIG20 | Warsaw | .WIG20 | 1985.04 | 1967.77 | +0.88% | +10.77% |
.BETI | Bucharest | .BETI | 14107.41 | 14136.06 | -0.20% | +20.95% |
Spread | Daily | |||||
vs Bund | change in | |||||
Czech Republic | spread | |||||
CZ2YT=RR | 2-year | CZ2YT=RR | 5.3160 | -0.2540 | +212bps | -29bps |
CZ5YT=RR | 5-year | CZ5YT=RR | 4.7250 | 0.0140 | +206bps | -3bps |
CZ10YT=RR | 10-year | CZ10YT=RR | 4.4090 | -0.0060 | +176bps | -6bps |
Poland | ||||||
PL2YT=RR | 2-year | PL2YT=RR | 4.8630 | 0.0180 | +167bps | -2bps |
PL5YT=RR | 5-year | PL5YT=RR | 5.1500 | 0.0190 | +248bps | -3bps |
PL10YT=RR | 10-year | PL10YT=RR | 5.6180 | 0.0170 | +297bps | -4bps |
FORWARD | ||||||
3x6 | 6x9 | 9x12 | 3M interbank | |||
Czech Rep | CZKFRAPRIBOR= | 6.74 | 5.79 | 4.84 | 7.08 | |
Hungary | HUFFRABUBOR= | 10.96 | 9.48 | 8.35 | 12.88 | |
Poland | PLNFRAWIBOR= | 4.79 | 4.15 | 3.94 | 5.81 | |
Note: FRA quotes | are for ask prices | |||||
************************************************************** | ||||||
(Reporting by Boldizsar Gyori in Budapest, Jason Hovet in Prague and Karol Badohal in Warsaw; Editing by Rashmi Aich)
((boldizsar.gyori@thomsonreuters.com;))
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