CEE MARKETS-Crown recovers from fall to nearly 2-year low after inflation surprise
15/02/2024 12:51
(Adds fresh fx table, trader comment on crown)
By Boldizsar Gyori
BUDAPEST, Feb 15 (Reuters) - The Czech crown regained
some ground on Thursday after a sharp fall to a 23-month low, as
data showing a drop in January inflation led to more bets on a
steep decline in interest rates.
The crown has lost more than 2% since a week ago when the
Czech National Bank stepped up its monetary easing cycle, with
the quick move to weaker levels attracting local buyers.
Central Europe's currencies mostly retreated on Thursday,
with investors largely waiting for U.S. retail sales figures
later in the day to gauge the potential timing of a first rate
cut by the Federal Reserve.
Czech inflation in January fell to its lowest since March
2021, coming in at 2.3% year-on-year from nearly 7% in December.
The closely watched data comes after the Czech National Bank
started easing policy in December with a 25 basis point (bp)
rate cut and followed last week by a sharper 50 bps move.
"The noticeable slowdown in inflation in January opens space
to an even sharper reduction of interest rates in March," said
Patrik Rozumbersky, a UniCredit economist, adding a 75 bps move
was in play.
The Czech crown EURCZK= traded 0.2% on the day at 25.38 to
the euro at 1217 GMT, after hitting a 23-month low of 25.52
earlier in the session.
"The move was quite big since last week's (CNB rate
meeting), so printing new EUR/CZK (exchange rate) highs are
getting more and more difficult, and the rebound is natural, not
to mention these levels are attracting some local (euro)
sellers," a trader said.
Short-end market rates fell around 15 bps on Thursday.
Central bank officials maintained a hawkish tone after the
data, with Governor Ales Michl saying inflationary risks like a
weaker crown and budget deficits remained, while core inflation
was still high.
"Those are arguments to lower interest rates carefully and
why we can stop the process of lowering rates whenever," he said
on social media platform X.
In Poland, where inflation fell more than expected to below
4%, the zloty EURPLN= also weakened 0.1%.
Central bank Governor Adam Glapinski said last week policy
could remain unchanged for the rest of the year amid "very high
uncertainty" over the outlook for inflation.
Two of nine Hungarian rate-setters backed a
larger-than-consensus 100-bp rate cut at the central bank's Jan.
30 policy meeting, minutes of the meeting published on Wednesday
showed. The forint EURHUF= traded sideways at 388.75.
January's split was the first among policymakers since May
2016. The next rate meeting is due on Feb. 27.
CEE SNAPSHO AT
MARKETS T 1317 CET
CURRENC
IES
Latest Previous Daily Change
bid close change in 2024
EURCZK= Czech EURCZK= 25.3830 25.4240 +0.16% -2.68%
crown
EURHUF= Hungary EURHUF= 389.250 389.0000 -0.06% -1.56%
forint 0
EURPLN= Polish EURPLN= 4.3470 4.3405 -0.15% -0.06%
zloty
EURRON= Romania EURRON= 4.9769 4.9759 -0.02% -0.05%
n leu
EURRSD= Serbian EURRSD= 117.130 117.1400 +0.01% +0.10%
dinar 0
Note: calculate 1800
daily d from CET
change
Latest Previous Daily Change
close change in 2024
.PX Prague .PX 1480.59 1479.230 +0.09% +4.71%
0
.BUX Budapes .BUX 65741.5 64999.45 +1.14% +8.45%
t 2
.WIG20 Warsaw .WIG20 2344.07 2347.65 -0.15% +0.05%
.BETI Buchare .BETI 15706.9 15693.33 +0.09% +2.19%
st 9
Spread Daily
vs Bund change
in
Czech spread
Republi
c
CZ2YT=R s
CZ5YT=R s
CZ10YT= s
Poland
PL2YT=R s
PL5YT=R s
PL10YT= s
FORWARD
3x6 6x9 9x12 3M
interba
nk
Czech CZKFRA < 4.89 3.89 3.25 6.13
Rep PRIBOR=>
Hungary HUFFRA < 6.95 5.75 5.61 8.96
BUBOR=>
Poland PLNFRA < 5.72 5.49 5.17 5.86
WIBOR=>
Note: are for ask prices
FRA
quotes
**********************************************
****************
(Reporting by Boldizsar Gyori in Budapest and Jason Hovet in
Prague; Editing by Mark Potter and Krishna Chandra Eluri)
((boldizsar.gyori@thomsonreuters.com))
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