CEE MARKETS-FX settle back into range after recent losses, wait on Fed

Colt CZ SE

19/09/2023 11:45

By Boldizsar  Gyori
       BUDAPEST, Sept 19 (Reuters) - Central Europe's
currencies settled into a softer range on Tuesday after sharp
falls over recent weeks as markets adjust to the start of
monetary easing in the region, with attention turning to a U.S.
rate decision this week.
    High interest rates in central Europe have drawn investors
over the past year, but the region has seen its rate
differential chipped away as global peers like the European
Central Bank tighten policy.
    The U.S. Federal Reserve kicks off a two-day policy meeting
on Tuesday with officials widely expected to keep rates on hold
for now. New economic projections may signal whether they feel
rates still need to rise further before the end of the year.
    "Further stabilization of FX markets is highly probable
while waiting for the Fed's decision," PKO BP said in a note. 
    Poland's zloty, the Czech crown and the Hungarian forint are
expected to weaken in the shift to looser policy that began in
May with Hungary's central bank delivering its first cut.
    A larger than expected Polish rate cut this month took
markets by surprise, pushing currencies down.
    The zloty  EURPLN=  is more than 3% weaker since that
decision, and on Tuesday it edged 0.2% lower to 4.651 per euro.
    The crown  EURCZK=  has also lost about 1% since before the
Polish rate cut, with markets having raised bets on the size of
rate cuts the central bank there may take once it begins its own
easing.
    It also eased 0.1% on Tuesday to 24.44 to the euro, after
trading as low as 24.645 earlier this month. The crown has been
steadied by weekend comments from Czech National Bank Governor
Ales Michl, who said a quick interest rate cut could be
expected.
    Vice-Governor Jan Frait told Bloomberg in an interview
published on Tuesday that a cut this year could still not be
ruled out, but that any monetary easing would be cautious.
    In Hungary, the forint  EURHUF=  was the gainer, adding 0.3%
to 383.75 to the euro, while Romania's leu  EURRON=  was steady
around lows last seen in May.
    On stock markets, Czech gunmaker Colt's  CZG.PR  shares fell
2% after it remained cautious in its outlook for this year,
analysts said.
    
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1227              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2023
 EURCZK  Czech                                       
 EURHUF  Hungary                0        0           
 EURPLN  Polish                                      
 EURRON  Romanian                                    
 EURRSD  Serbian                0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2023
 .PX     Prague     .PX     1346.91  1351.68   -0.35%   +12.08
                                          00                 %
 .BUX    Budapest   .BUX    57770.0  57669.1   +0.17%   +31.91
                                  5        9                 %
 .WIG20  Warsaw    <.WIG20  1937.32  1943.94   -0.34%   +8.11%
                   >                                   
 .BETI   Buchares   .BETI   14279.8  14178.6   +0.71%   +22.43
         t                        2        6                 %
                                                              
                                              Spread   Daily
                                              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 Boldizsar Gyori in Budapest; editing by Jason
Hovet and Mark Heinrich)
 ((boldizsar.gyori@thomsonreuters.com;))
 
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