CEE MARKETS-Forint fades after modest rate hike, zloty sinks to 5-month low

·3 min read

PRAGUE, Sept 22 (Reuters) - Hungary's forint fell further from its September highs on Wednesday, a day after its central bank slowed the pace of interest rate hikes, while the Polish zloty touched a more than 5-month low ahead of a key constitutional court ruling. The forint led losses among central European currencies, which largely stayed under pressure as markets awaited more clues about the U.S. Federal Reserve's tapering timeline. Only the crown firmed, amid growing certainty the Czech central bank could accelerate its own rate tightening cycle. Central European stock markets also strengthened, led by a 1.5% rise in Warsaw blue-chip stocks as global markets found relief after Chinese developer Evergrande said it could pay a coupon on one of its bonds. Worries over a possible default and its spillover effects hit markets this week. In Poland, the zloty had dropped 0.2% to 4.631 to the euro by 0904 GMT. The country's Constitutional Tribunal could rule on Wednesday on whether Poland's constitution or European Union treaties take precedence, a judgement that an EU commissioner said was holding up the release of European funds to Warsaw. "(The decision) could put further pressure on the zloty and could have further consequences in the ongoing fight with Brussels and the future of the National Recovery Plan," Bank Millennium said. Hungary's forint fell 0.5%. Its central bank delivered a lower-than-expected 15 basis point rate increase on Tuesday, but assured markets a tightening cycle would continue as it lifted its inflation forecasts. Central banks in Hungary and the Czech Republic were the first in the European Union to start interest rate hikes in June. "One might question why higher inflation risk does not warrant faster, more urgent rate hikes, but all in all, the communication suggested that rate hikes may continue further than it appeared before," Commerzbank said. Markets are betting the Czech central bank could deliver a 50 basis point rate hike - above their standard 25 basis point moves - at a Sept. 30 meeting. It would be the first time since 1997 that the bank opted for a steeper hike. The crown outperformed on Wednesday, gaining a touch to 25.413 per euro, but it was off a more than 1-1/2 year high of 25.248 hit last week. CEE SNAPSHO AT MARKETS T 1104 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 1297.58 1294.19 +0.26% +26.33 00 % .BUX Budapest 51133.4 50815.5 +0.63% +21.44 7 6 % .WIG20 Warsaw <.WIG20 2318.14 2278.11 +1.76% +16.84 > % .BETI Buchares 12347.8 12356.9 -0.07% +25.93 t 8 0 % .SBITO Ljubljan <.SBITO 1156.10 1153.02 +0.27% +28.33 P a P> % .CRBEX Zagreb <.CRBEX 1948.92 1945.53 +0.17% +12.05 > % .BELEX Belgrade <.BELEX 798.66 795.74 +0.37% +6.69% 15 15> .SOFIX Sofia <.SOFIX 560.72 560.72 +0.00% +25.29 > % 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 Jason Hovet in Prague, Joanna Plucinska in Warsaw and Gergely Szakacs in Budapest; Editing by Pravin Char)

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