CEE MARKETS-Crown eases after surprise Dec inflation slowdown, forint rally fades

4ig.

11/01/2023 10:17

By Krisztina Than
       BUDAPEST, Jan 11 (Reuters) - The Czech crown eased on
Wednesday after data showed a surprise slowing of price growth
in December, supporting the case for stable interest rates,
while the Hungarian forint's early-January rally also lost
steam.
    The forint  EURHUF= , which firmed around 2% in the first
week of 2023, helped by improved global mood on markets and a
large dollar-denominated FX bond issue by Hungary, was down
0.2%, trading at around 400 versus the euro.
    "The HUF rally of the past month appears to be fading
already... EUR-HUF is drifting back up towards the key 400.00
mark," Commerzbank said in a note, adding that uncertainty over
the release of large suspended European Union funds was likely
weighing on the forint.
    Hungary signed important agreements with Brussels late last
year amid an ongoing rule-of-law dispute, but the government
still needs to clear a set of hurdles before billions of euros
of suspended EU funds could start to flow later in 2023. 
    Elsewhere, Czech headline inflation unexpectedly slowed in
December, helped by a year-end drop in fuel prices, backing
policymakers seeking stable interest rates even as prices keep
rising at a double-digit clip.  urn:newsml:reuters.com:*:nL8N33V4EJ
    This shifted the Czech crown  EURCZK=  back to the weaker
side of 24 versus the euro. It was down 0.3% at 24.0230 to the
euro at 1015 GMT.
    While the data showed easing prices, markets will be
watching January data to see what impact companies' repricing
will have at the start of the year. The central bank has not
taken rate hikes off the table, and some central bankers have
signalled January price data will be key.
    "Overall, the January data will be important for markets and
we won't learn that until after the (next policy meeting) in
February," CSOB said.
    A Prague trader added that CPI was "the starter for a small
(weakening) change, but generally I would say there is good
chance to see CZK stronger, somewhere below 24.00 in the coming
days."
    Investors are eyeing U.S. inflation, which is seen having
cooled further in December. They hope the data, due on Thursday,
will provide clues on the Federal Reserve's policy tightening
plans. That could also impact Central Europe's markets. 
    The Romanian leu  EURRON=  was broadly stable at 4.9315
after the Romanian central bank raised its main interest rate by
25 bps to 7% on Tuesday.  urn:newsml:reuters.com:*:nL8N33R0ZV
    The Polish zloty  EURPLN=  was 0.1% firmer. Markets in
Poland were looking ahead to a parliament sitting starting on
Wednesday at which lawmakers may vote on amendments to a
judicial reform bill designed to unblock European Union COVID-19
recovery funds withheld due to a dispute over the rule of law.
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1113              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2023
 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 2023
 .PX     Prague     .PX     1270.36  1269.69   +0.05%   +5.71%
                                          00           
 .BUX    Budapest   .BUX    46247.1  46042.1   +0.45%   +5.60%
                                  7        3           
 .WIG20  Warsaw    <.WIG20  1938.80  1937.98   +0.04%   +8.19%
                   >                                   
 .BETI   Buchares   .BETI   12314.9  12244.1   +0.58%   +5.58%
         t                        2        7           
 .SBITO  Ljubljan  <.SBITO  1096.97  1088.14   +0.81%   +4.59%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  2062.59  2050.44   +0.59%   +684.9
                   >                                        4%
 .BELEX  Belgrade  <.BELEX   839.95   839.12   +0.10%   +1.86%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   617.68   617.38   +0.05%   +2.69%
                   >                                   
                                                              
                            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  
                   FORWARD                                    
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech                                      
         Hungary                                     
         Poland                                      
         Note:     are for ask                                
         FRA       prices                              
         quotes                                        
         ********************************************         
         ******************                            
 (Reporting by Krisztina Than in Budapest and Jason Hovet in
Prague; Editing by Shailesh Kuber)
 ((krisztina.than@thomsonreuters.com))
 
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