CEE MARKETS-Zloty leads gains, forint and crown higher after rate hikes

·3 min read

By Anita Komuves BUDAPEST, June 25 (Reuters) - Central European currencies extended their gains on Friday at the end of a week when the Hungarian and Czech central banks hiked rates, which supported their currencies and added to speculations about a possible rate hike in Poland as well. Central Europe is facing stronger inflationary pressures than the euro zone or elsewhere in Europe, putting central banks on alert. But unlike in the Czech Republic or Hungary, Poland's central bank has so far struck a more dovish tone. However, some analysts and traders see a chance for Poland to follow suit, which could boost the zloty. The zloty led gains in the region on Friday, adding 0.38% and trading at 4.5059 per euro. "These moves are most likely late-month flows as companies close their positions before the holidays," a trader in Warsaw said. The Czech crown firmed 0.12% to 25.440 versus the common currency. The Hungarian forint edged up 0.06% and was trading at 351.40, 1% weaker than on Wednesday when it was boosted by the rate hike. "The forint's firming turned back after the Czech rate hike, which dampened the attractiveness of the forint as the Czech economy is more balanced," an FX trader in Budapest said. The bigger swings in the forint's rate were also due to low liqidity, traders said. Government bond yields in Hungary were stable on Friday following a drop on the long end of the curve earlier this week after the central bank signalled its first hike would be followed by others. "We saw a strong flattening of the curve as the market is expecting the bank's new policy to be successful," a fixed-income trader in Budapest said. "The bank said that it will continue its quantitative easing program, which also supports the long end." The 10-year government bond yield was 2.85% on Friday, about 10 basis points lower than before the rate meeting. The yield on the 15-year bond was around 3.17%, a drop of nearly 20 basis points since Tuesday morning. Stocks in the region firmed, with Bucharest leading gains and adding 0.81%. Budapest's equities were up 0.48% while Prague added 0.06% and Warsaw was 0.1% stronger. CEE SNAPSHO AT MARKETS T 1111 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: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 .PX Prague 1162.47 1161.73 +0.06% +13.18 00 % .BUX Budapest 48842.2 48610.4 +0.48% +15.99 5 0 % .WIG20 Warsaw 2275.40 2273.11 +0.10% +14.69 % .BETI Buchares 11781.5 11686.3 +0.81% +20.15 t 0 8 % .SBITOP Ljubljan <.SBITOP 1137.25 1137.00 +0.02% +26.24 a > % .CRBEX Zagreb 1998.87 1998.59 +0.01% +14.92 % .BELEX1 Belgrade <.BELEX1 776.10 772.63 +0.45% +3.67% 5 5> .SOFIX Sofia 556.92 554.54 +0.43% +24.44 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT=R 2-year s CZ5YT=R 5-year s CZ10YT= s Poland PL2YT=R 2-year s PL5YT=R 5-year s PL10YT= s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.93 1.32 1.60 0.66 Rep Hungary 1.51 1.82 1.98 1.04 Poland 0.36 0.61 0.79 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Editing by Krishna Chandra Eluri)

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