CEE MARKETS-Currencies relax after week of gains fueled by rate hike hopes

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By Anita Komuves BUDAPEST, Oct. 15 (Reuters) – Central European currencies edged down in a slight correction on Friday, giving up some of their gains posted last week on rate hike expectations by central banks of the region as inflation accelerated in the region. The Hungarian forint eased 0.19% to 359.65 per euro. Attention turned to the Hungarian central bank’s rate-setting meeting next Tuesday where another hike is expected, after four consecutive hikes since June. According to a Reuters analyst poll, the National Bank of Hungary (NBH) is expected to raise its key rate by 15 basis points to 1.8%. There is also an odd chance the bank could make a larger hike on Tuesday, some analysts said. “We see a not insignificant risk that the central bank will make a one-off 30bp hike at the next October or November meeting,” Morgan Stanley analysts said in a note. The forint has given up almost all of its gains since the BNH began to tighten in June, slowing the pace of rate hikes last month despite raising its inflation expectations. The Czech central bank has since shocked the markets with a 75bp rate hike, while the Polish central bank unexpectedly raised its key rate by 40bp. “Another 15 basis point hike won’t help the forint significantly, although it could strengthen a bit,” said an FX trader in Budapest. The Czech koruna fell 0.09% to 25.400 per euro, although analysts expect it to remain supported by further rate hikes. The currency has gained 3.26% so far this year, outperforming its peers in the EEC region. The Polish zloty slipped 0.12% to 4.5733 against the euro. The currency was still trading on the stronger side of the important 4.6 level as it has strengthened 0.8% since the start of the week. “The market is still waiting for further interest rate hikes, which it believes should take place as early as November,” wrote Bank Millennium in a note. Stock markets in the region were mixed, with Budapest down 1.17% and Warsaw 0.52%, while Bucharest gained 0.36%. SNAPSHOT OF EEC MARKETS T 1110 CET CURRENC IES Last daily change previous bid closing change in 2021 EURCZK = Czech EURHUF = Hungary 0 EURPLN = Polish EURRON = Romania EURHRK = Croatia EURRSD = Serbian 0 Note: calculated from of 1800 daily CET change Last daily change previous close change in 2021 .PX Prague 1361.18 1362.260 -0.08% +32.52 0% .BUX Budapes 54493.4 55136.00 -1.17% +29, 41 t 8% .WIG20 Warsaw 2,446.75 2,459.50 -0.52% + 23.33% .BETI Bucare 12,772.9 12,727.40 + 0.36% +30.26 st 5% .SBITOP Ljublja <.sbitop na> % .CRBEX Zagreb 2,052.22 2,047.27 + 0.24% + 17.99% .BELEX1 Belgrad <.belex1 e> .SOFIX Sofia 573.71 572.99 + 0.13% + 28.19% Yield Yield Spread Daily variation (bid) vs Bund variation of Czech spread Republic CZ2YT = R s CZ5YT = R s CZ10YT = s Poland PL2YT = R s PL5YT = R s PL10YT = s FORWARD 3×6 6×9 9×12 3M Czech interbank 3.10 3.31 3.39 2.03 Hungary Rep 2.47 2.80 3.04 1.86 Poland 1.52 1.90 2.30 0.68 ****************************************** **** *** ********** (Additional reporting by Jason Hovet in Prague and Pawel Florkiewicz in Warsaw; Editing by Jan Harvey)


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