CEE MARKETS-FX looking for direction ahead of Romania rate decision

4ig.

10/01/2023 10:21

By Alan Charlish
       WARSAW, Jan 10 (Reuters) - Central European currencies were mixed on Tuesday, as markets eyed
a central bank meeting in Romania that analysts say could mark the end of policy tightening in the
region as well as a Polish parliament sitting crucial to unblocking EU funds.
    Analysts polled by Reuters expect the National Bank of Romania (NBR) to raise its key interest
rate by 25 basis points to 7.00% on Tuesday.
    Other central banks in the region have opted to keep rates on hold in recent months amid fears of
an economic slowdown caused by the fallout from the war in Ukraine.
    "From a rate perspective, we think this meeting should be the last live one, which will close the
CEE region's hiking cycle," ING said in a note.
    The Romanian leu  EURRON=  was broadly stable at 4.924.
    Falling gas prices and a weaker dollar are positive for central European FX, and ING said that
these factors had helped the leu to avoid the levels at which the central bank would intervene.
    The Polish zloty  EURPLN=  was 0.16% firmer at 4.6945.
    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.
    "Unfreezing the money is the market baseline scenario so if the sejm (parliament) meeting goes
the way the market expects nothing will change (for the zloty)," said  Mateusz Sutowicz, a financial
market analyst at Bank Millennium.
    The Hungarian forint  EURHUF= , which firmed around 2% in the first week of 2023, was 0.25%
weaker at 398 to the euro.
    "To be honest, I did not understand why the forint strengthened last week so much, I think it is
not justified considering the inflation worries," an FX dealer in Budapest said. "As for today's
move, it is simply intraday volatility, there is no news behind this."
    The Czech crown  EURCZK=  was stable at 23.989 to the euro.
                                CEE MARKETS        SNAPSHOT    AT                        
                                                                 1052 CET                
                                                   CURRENCIES                            
                                                   Latest      Previous        Daily     Change
                                                   bid         close           change    in 2023
 EURCZK=    Czech crown          EURCZK=           23.9890     23.9910         +0.01%    +0.70%
 EURHUF=    Hungary forint       EURHUF=           398.0000    397.0000        -0.25%    +0.36%
 EURPLN=    Polish zloty         EURPLN=           4.6945      4.7020          +0.16%    -0.11%
 EURRON=    Romanian leu         EURRON=           4.9240      4.9250          +0.02%    +0.38%
 EURHRK=    Croatian kuna        EURHRK=           7.5330      7.5365          +0.05%    +0.05%
 EURRSD=    Serbian dinar        EURRSD=           117.3300    117.3850        +0.05%    -0.03%
            Note: daily change  calculated from                                1800 CET  
                                                                                         
                                                   Latest      Previous        Daily     Change
                                                               close           change    in 2023
 .PX        Prague               .PX               1262.95     1270.9600       -0.63%    +5.09%
 .BUX       Budapest             .BUX              45628.61    45832.49        -0.44%    +4.19%
 .WIG20     Warsaw               .WIG20            1900.59     1912.47         -0.62%    +6.06%
 .BETI      Bucharest            .BETI             12290.32    12286.92        +0.03%    +5.37%
 .SBITOP    Ljubljana            .SBITOP           1081.78     1077.72         +0.38%    +3.14%
 .CRBEX     Zagreb               .CRBEX            2038.22     2036.77         +0.07%    +675.67%
 .BELEX15   Belgrade             .BELEX15          836.89      820.82          +1.96%    +1.49%
 .SOFIX     Sofia                .SOFIX            609.76      607.40          +0.39%    +1.37%
                                                                                         
                                                   Yield       Yield           Spread    Daily
                                                   (bid)       change          vs Bund   change in
            Czech Republic                                                               spread
 CZ2YT=RR   2-year               CZ2YT=RR          5.5710      -0.1010         +292bps   -16bps
 CZ5YT=RR   5-year               CZ5YT=RR          4.7720      0.0030          +246bps   -7bps
 CZ10YT=RR  10-year              CZ10YT=RR         4.4940      0.0080          +223bps   -5bps
            Poland                                                                       
 PL2YT=RR   2-year               PL2YT=RR          6.0750      0.0990          +343bps   +4bps
 PL5YT=RR   5-year               PL5YT=RR          5.8780      0.1530          +357bps   +8bps
 PL10YT=RR  10-year              PL10YT=RR         5.9940      0.1400          +373bps   +9bps
                                FORWARD                                                  
                                                   3x6         6x9             9x12      3M interbank
            Czech Rep            CZKFRA  PRIBOR=   7.08        6.74            6.24      7.22
            Hungary              HUFFRA  BUBOR=    13.98       12.48           10.98     16.09
            Poland               PLNFRA  WIBOR=    7.01        6.81            6.35      6.96
            Note: FRA quotes    are for ask prices                                       
            **************************************************************
 (Reporting by Alan Charlish in Warsaw, Luiza Ilie in Bucharest and Krisztina Than in Budapest;
Editing by Susan Fenton)
 ((alan.charlish@thomsonreuters.com;))
 
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