CEE MARKETS-Forint eases after Fitch changes rating outlook to negative

4ig.

23/01/2023 09:37

By Krisztina Than
       BUDAPEST, Jan 23 (Reuters) - Hungary's forint  EURHUF= 
eased on Monday after ratings agency Fitch on Friday revised its
outlook on Hungary's debt rating to negative from stable, while
a weaker dollar and lower gas prices continued to support the
region's currencies. 
    Investors were cautious ahead of the National Bank of
Hungary's (NBH) first monthly rate meeting this year, due on
Tuesday. The central bank is expected to keep its main rates on
hold as it is still facing upside inflation risks. Inflation was
running at an annual 24.5% in December. 
    However, after the forint's gains this year, market players
will be eyeing any hints of policy normalisation going forward
after a string of rate increases last year, including an
emergency move in October to launch a daily deposit at an 18%
rate to shore up the currency. Hungary has the European Union's
highest interest rates. 
    At 0810 GMT, the forint was 0.11% weaker against the euro at
393.85 and by 0851 GMT it extended losses to 395.20. However, it
was still stronger than its levels of around 400 at the end of
2022.
    "While we do not expect any change in the level of interest
rates, we believe that the central bank may begin preparation
for the normalisation of rates," analysts at Erste said in a
research note. 
    "We believe that the Czech National Bank is most likely to
be the first to begin with monetary easing in the second half of
the year."
    While the forint has gained this year as the mood in global
markets improved, a peak in inflation is still hard to predict
and Hungary has still not managed to unblock EU funding, which
was suspended amid a rule of law dispute with Brussels. Fitch
said it expected a high probability of delays in the
disbursement of EU funds to Hungary.
    A Reuters poll published on Friday predicted the NBH would
leave its base rate unchanged at 13% on Tuesday.
    ING analysts said they expected "the hawkish NBH to dampen
the current market speculation on an early rate cut, which
should be positive for the forint."  
    Elsewhere, ING said the Czech crown  EURCZK=  would likely
remain near 24.00 to the euro and the Polish zloty could firm
below 4.70 versus the euro. On Monday the crown was steady at
23.898. The zloty  EURPLN=  eased 0.08%.
    Bank Millenium analysts said that due to uncertainty over
the unblocking of EU funds for Poland, "the zloty - despite the
rising eurodollar - remains under moderate pressure from
sellers."     
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        0918              
                                     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     1290.29  1280.54   +0.76%   +7.37%
                                          00           
 .BUX    Budapest   .BUX    46585.5  46440.1   +0.31%   +6.37%
                                  0        4           
 .WIG20  Warsaw    <.WIG20  1906.97  1892.32   +0.77%   +6.42%
                   >                                   
 .BETI   Buchares   .BETI   12130.7  12075.7   +0.46%   +4.01%
         t                        1        2           
 .SBITO  Ljubljan  <.SBITO  1114.28  1114.35   -0.01%   +6.24%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  2068.85  2068.85   +0.00%   +687.3
                   >                                        2%
 .BELEX  Belgrade  <.BELEX   833.56   833.56   +0.00%   +1.09%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   617.74   617.74   +0.00%   +2.70%
                   >                                   
                                                              
                            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, Jason Hovet in
Prague; and Anna Wlodarczak-Semczuk in Warsaw, Editing by Sharon
Singleton)
 ((krisztina.than@thomsonreuters.com;))
 
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