CEE MARKETS-Forint weaker before rate decision, crown off 14-year highs

4ig.

24/01/2023 11:13

By Jason Hovet
       PRAGUE, Jan 24 (Reuters) - Hungary's forint eased
heading into a central bank meeting on Tuesday, with
policymakers likely set to keep interest rates stable at high
levels although some in the market were seeing arguments for
policy easing already.
    Other central European currencies also weakened, while stock
markets continued to recover some ground after softening last
week. 
    Central Europe's rate setters have shifted policy into
stable rates since the second half of 2022, wary of economic
slowdowns even as inflation stays high at double-digit rates.
    The shift came after heavy hiking cycles since 2021, before 
major global central banks like the U.S. Federal Reserve or
European Central Bank started tightening.
    In Hungary, the central bank has been the most aggressive,
with a key policy rate at 13%, which it needed to fight
inflation and buck up a forint that was hitting record lows last
year. It has also lifted overnight rates and other measures to
help the forint.
    Citigroup said it may look to start cutting the overnight
rate, and other analysts said it could test market sensitivity
now.
    "The focus will be on the statement as any signal of
potential easing could cause currency weakness. The central bank
may test the market to gauge the reaction before ultimately
deciding on the forward rate path," Morgan Stanley said.
    The forint  EURHUF=  has stayed on the strong side of 400 to
the euro so far in 2023, well away from lows above 434. It
traded down 0.3% on Tuesday at 396.70.    
    Markets have also priced in rate cuts in the Czech Republic,
expected later this year. 
    The crown, helped by easing worries of an energy crunch as
gas prices fall and also backstopped by a central bank pledge to
intervene to prevent any sharp weakening, has traded at more
than 14-year highs already in January.
    It hit as high as 23.855 to the euro on Monday, touching its
highest since October 2008, but was down 0.1% on Tuesday at
23.878.
    In Poland, the zloty  EURPLN=  stayed under pressure, with
some analysts seeing worry over European Union funds as a drag.
    Bills needed to end EU rule-of-law disputes holding up funds
are still going through parliament.
    "After the government's media offensive in December, work on
the amendment to the law on the Supreme Court slowed down, and
the sitting of the Sejm scheduled for this week will probably
not bring a breakthrough," Bank Millennium said. 
    "The result is a growing pressure towards a weaker zloty."
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1130              
                                     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     1292.89  1287.87   +0.39%   +7.59%
                                          00           
 .BUX    Budapest   .BUX    46822.3  46777.3   +0.10%   +6.92%
                                  3        0           
 .WIG20  Warsaw    <.WIG20  1929.70  1923.15   +0.34%   +7.68%
                   >                                   
 .BETI   Buchares   .BETI   12179.4  12179.4   +0.00%   +4.42%
         t                        9        9           
 .SBITO  Ljubljan  <.SBITO  1113.86  1112.13   +0.16%   +6.20%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  2086.29  2073.83   +0.60%   +693.9
                   >                                        6%
 .BELEX  Belgrade  <.BELEX   840.94   838.01   +0.35%   +1.98%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   618.34   615.55   +0.45%   +2.80%
                   >                                   
                                                              
                            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 Jason Hovet in Prague, Krisztina Than in Budapest
and Pawel Florkiewicz in Warsaw; Editing by Shailesh Kuber)
 ((jason.hovet@thomsonreuters.com))
 
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