Forint falls amid dollar strength, zloty eases ahead of rate decision
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PRAGUE — Hungary’s forint fell past
the psychological 380 per euro level for the first time in a
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week on Wednesday and the Czech crown eased to a near two-week
low, with dollar strength cutting risk appetite in central
Europe.
In Poland, the zloty coasted ahead of the conclusion of a
central bank meeting later in the day as markets expect
policymakers to leave rates unchanged at two-decade highs while
waiting for inflation to retreat.
Central Europe’s rate setters, who were ahead of most by
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starting sharp hiking cycles in 2021 to combat rising prices,
have all shifted into stable policy in recent months even while
global peers like the U.S. Federal Reserve and European Central
Bank continue to rev up policy tightening.
That is weighing on currencies somewhat, seen on Wednesday
as interest for riskier assets was hit by dollar strength after
Fed Chair Jerome Powell said late on Tuesday the U.S. bank would
likely need to raise interest rates more than expected.
The forint, which has been around 10-month highs
in the past week, fell the most on Wednesay, shedding 0.8% to
trade at 381.45 to the euro by 0923 GMT.
A Budapest-based dealer said the forint’s weakening could be
due to lingering impacts from Powell’s comments. Hungary’s
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central bank governor Gyorgy Matolcsy also spoke on Wednesay,
calling on the government to aid efforts to curb inflation.
In his speech, Matolscy said the country faced risks from
rising debt servicing costs.
“I think the Powell impacts were largely done yesterday… I
cannot see any other reason (for today’s sharp weakening) than
central bank chief Matolcsy’s comments on the increase in the
debt service burden, and on inflation,” the dealer said.
Hungary’s central bank has the European Union’s highest base
rate, at 13%, and is battling inflation that is stuck at 25%
after a slight easing in February, seen in data on Wednesday.
The bank has sought to keep rates unchanged, resisting
government pressure to begin lowering borrowing costs after the
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economy slipped into a technical recession at the end of 2022.
Poland’s economy is also under pressure, although rate
setters were expected to stay on hold on Wednesday. Markets will
be watching new inflation projections for signs of when rates
could start to fall.
“Today’s meeting may bring some changes in communication,
but we do not expect changes in interest rates today,” Alor Bank
said in a note.
The zloty eased 0.1% at 4.695 per euro, while the
crown was down 0.3% at 23.643, off a session low of
23.69.
The Czech currency has retreated in recent sessions after
touching a nearly 15-year high at the start of March.
“The market is a bit nervous since we touched around
23.350,” one trader said.
CEE SNAPSHO AT
MARKETS T 1023
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CET
CURRENC
IES
Latest Previou Daily Change
s
bid close change in 2023
EURCZK Czech
EURHUF Hungary
EURPLN Polish
EURRON Romanian
EURHRK Croatian
EURRSD Serbian
Note: calcula 1800
daily ted CET
change from
Latest Previou Daily Change
s
close change in 2023
.PX Prague 1412.44 1400.07 +0.88% +17.53
00 %
.BUX Budapest 42571.5 43391.0 -1.89% -2.79%
3 2
.WIG20 Warsaw <.wig20>
.BETI Buchares 12370.5 12432.0 -0.50% +6.06%
t 3 8
.SBITO Ljubljan <.sbito p a> %
.BELEX Belgrade <.belex>
.SOFIX Sofia <.sofix>
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
CZ2YT= 2-year
CZ5YT= 5-year
CZ10YT
Poland
PL2YT= 2-year
PL5YT= 5-year
PL10YT
FORWARD
3×6 6×9 9×12 3M
interba
nk
Czech
Hungary
Poland
Note: are for
FRA ask
quotes prices
***********************************
***************************
(Reporting by Jason Hovet in Prague, Krisztina Than in Budapest
and Alan Charlish in Warsaw; Editing by Kim Coghill)
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