CEE MARKETS-FX firms as market eyes Czech rate hike

Reuters
·3 min read

WARSAW, June 23 (Reuters) - Central European currencies were firmer on Wednesday, ahead of a Czech central bank meeting that economists expect will deliver the second rate hike in the region in as many days. Central and eastern Europe has the highest inflation in the European Union, and on Tuesday the Hungarian central bank became the first in the bloc to launch a cycle of rate hikes to combat growing price pressures in the aftermath of the COVID-19 pandemic. It raised its base rate to 0.9% from 0.6%, a slightly bigger hike than analysts had expected, and said it would review the need for more hikes on a monthly basis. Markets expect the Czech central bank will follow suit with its first rate hike since just before the pandemic started. The Czech crown was 0.25% firmer against the euro at 25.454 at 0844 GMT, close to its two-week moving average. It hit 15-month highs on the strong side of 25.30 earlier in June. Commerzbank said a rate hike was likely, with the majority on the Czech National Bank (CNB) board not wanting to wait and that the crown had further room to gain over its forecast horizon. "Consumer prices are close to the top end of the CNB target range, core rate remains above it and producer price momentum points towards increased price pressure," it said. The Hungarian forint was the best performing currency in the region, firming 0.49% to 349.40 after Tuesday's rate hike. "The central bank surprised to the hawkish side by saying that it will deliver further hikes on a monthly basis ... Moreover, the statement had a clear hawkish shift in tone as far as inflation risks are concerned," Morgan Stanley said in a note. In Poland, where the central bank has struck a much more dovish tone than its Czech and Hungarian counterparts, the zloty was 0.09% firmer at 4.518. CEE SNAPSHO AT MARKETS T 1044 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech EURHUF= Hungary 0 EURPLN= Polish EURRON= Romania EURHRK= Croatia EURRSD= Serbian 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1164.97 1163.140 +0.16% +13.42 0 % .BUX Budapes 48391.9 48193.16 +0.41% +14.92 t 1 % .WIG20 Warsaw 2220.49 2220.53 -0.00% +11.92 % .BETI Buchare 11542.5 11409.11 +1.17% +17.71 st 8 % .SBITOP Ljublja <.SBITOP 1134.67 1131.36 +0.29% +25.96 na > % .CRBEX Zagreb 1982.00 1981.15 +0.04% +13.95 % .BELEX1 Belgrad <.BELEX1 772.63 776.74 -0.53% +3.21% 5 e 5> .SOFIX Sofia 552.57 550.21 +0.43% +23.47 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c CZ2YT=R s CZ5YT=R s CZ10YT= s Poland PL2YT=R s PL5YT=R s PL10YT= s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.83 1.11 1.40 0.44 Rep Hungary 1.49 1.79 1.95 0.95 Poland 0.35 0.58 0.79 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague and Anita Komuves in Budapest; Editing by Giles Elgood)

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