CEE MARKETS-Forint on back foot ahead of credit rating review

4ig.

20/01/2023 09:40

By Alan Charlish
       WARSAW, Jan 20 (Reuters) - The Hungarian forint
 EURHUF=  pulled back from recent highs on Friday as markets
awaited a review of the country's debt rating by Fitch later in
the day and a central bank meeting next week, while the Czech
crown steadied around a 15-year high.
    Economists see a risk that Fitch could cut the outlook on
Hungary's rating to negative due to a dispute with the European
Commission over judicial independence, academic freedoms, LGBT
rights and the asylum system that has resulted in 22 billion
euros ($23.83 billion) in funding being withheld.
    "With no final agreement with the European Union yet, there
is a good chance that the stable outlook will be downgraded to
negative by Fitch," brokerage Equilor said in a note.
    The forint has been boosted so far this year by falling gas
prices and a weaker dollar, but investors' appetite for riskier
assets has been tempered by fears about a possible recession in
the United States.
    At 0910 GMT, the forint was 0.24% weaker against the euro at
396.25.
    "In the FX market, the CEE region remains strongly supported
with EUR/USD higher and gas prices," ING analysts said in a
note. 
    "Today, on the other hand, we could see a slight retracement
of gains in the region resulting from yesterday's correction in
equity markets and the deterioration in sentiment after the new
year rally in Europe."
    The crown  EURCZK=  hovered around the highs it hit on
Thursday, when it reached its strongest level since 2008. It was
little changed against the euro at 23.937. Analysts say the
gains so far in 2023 may be short-lived, with a shrinking
interest rate differential expected to cause weakening this
year.
    The Polish zloty  EURPLN=  recovered some ground, firming
0.32% to 4.715 after having weakened in recent days.
    Piotr Poplawski, senior economist at ING, said sentiment
towards the zloty this week had been affected by an upcoming
ruling from the European Union's top court on foreign currency
mortgages, a major risk factor for Polish banks.
    "I would say that at least some investors may be betting
that local banks will have a problem after the ECJ ruling on FX
mortgages," he said.
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1010              
                                     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     1277.71  1269.42   +0.65%   +6.32%
                                          00           
 .BUX    Budapest   .BUX    46794.7  46691.8   +0.22%   +6.85%
                                  2        0           
 .WIG20  Warsaw    <.WIG20  1890.51  1889.84   +0.04%   +5.50%
                   >                                   
 .BETI   Buchares   .BETI   12123.0  12090.5   +0.27%   +3.94%
         t                        7        2           
 .SBITO  Ljubljan  <.SBITO  1106.53  1111.37   -0.44%   +5.50%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  2056.34  2058.46   -0.10%   +682.5
                   >                                        6%
 .BELEX  Belgrade  <.BELEX   832.53   833.05   -0.06%   +0.96%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   616.00   613.90   +0.34%   +2.41%
                   >                                   
                                                              
                            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                                        
         ********************************************         
         ******************                            
 ($1 = 0.9230 euros)
 (Reporting by Alan Charlish in Warsaw, Krisztina Than in
Budapest, Jason Hovet in Prague; Editing by Kim Coghill)
 ((alan.charlish@thomsonreuters.com;))
 
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