CEE MARKETS-Czech crown holds gains on rate hike bets as FX move sideways

Reuters
·3 min read

WARSAW, Sept 17 (Reuters) - Central European currencies largely drifted weaker and most stocks sagged on Friday, with global sentiment weak, although the Czech crown held near a more than 1-1/2 year high on bets the central bank could speed up rate hikes. The crown hit its highest since February 2020 - when the COVID-19 pandemic first started rattling markets - on Thursday after data showed a jump in producer prices and hawkish comments from a central banker. CSOB said comments on Thursday from Czech central bank Vice-Governor Marek Mora - who said in an interview with Bloomberg that odds were moving closer to a stronger 50 basis point rate hike at the next policy meeting this month - raised chances the bank could opt for a steeper rate hike. But the crown would still be caught in global trading moods until more central bankers possibly comment, it said. "Markets will be watching the outcome of the U.S. Fed meeting (next week) and also German elections (in September)," CSOB said. The crown was up 0.1% at 25.304 to the euro at 0844 GMT. The Hungarian forint was steady at 351.170 to the euro. The Polish zloty was at 4.582 to the euro. The zloty has lagged peers as Poland's central bank keeps policy loose despite inflation hitting a two-decade high. Analysts expected the zloty to stabilize, despite uncertainty over interest rates and the EU's delay on approving recovery funds. "We assume the Polish currency to be stable after the last two days...but local factors will still have a negative impact," Bank Millenium said in a note. In June, the Czech and Hungarian central banks became the first in the European Union to raise interest rates to tame price pressures coming as economies recover from the pandemic. The Czech bank has debated whether faster rate increases, something markets are betting on. In stock markets, central European indices were mixed, with Prague leading gains at 1306.53 while Warsaw dropped 0.26% and rising by 0.07% at 0855 GMT. CEE SNAPSHO AT MARKETS T 1044 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 Note: calcula 1800 daily ted CET change from STOCKS Latest Previou Daily Change s close change in 2021 .PX Prague 1306.18 1301.98 +0.32% +27.17 00 % .BUX Budapest 52345.4 52331.3 +0.03% +24.31 1 1 % .WIG20 Warsaw <.WIG20 2352.81 2357.28 -0.19% +18.59 > % .BETI Buchares 12291.2 12265.2 +0.21% +25.35 t 9 5 % .SBITO Ljubljan <.SBITO 1169.38 1169.31 +0.01% +29.81 P a P> % .CRBEX Zagreb <.CRBEX 1968.63 1968.69 -0.00% +13.19 > % .BELEX Belgrade <.BELEX 801.48 799.44 +0.26% +7.06% 15 15> .SOFIX Sofia <.SOFIX 559.92 561.86 -0.35% +25.11 > % BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year s CZ5YT= 5-year s CZ10YT s Poland PL2YT= 2-year s PL5YT= 5-year s PL10YT s FRA 3x6 6x9 9x12 3M interba nk Czech Hungary Poland Note: FRA quotes are for ask prices *********************************** *************************** (Reporting by Joanna Plucinska in Warsaw, Jason Hovet in Prague; Editing by Angus MacSwan)

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