CEE MARKETS-Czech crown hits 21-month past 25/euro level as dollar weighs on FX
05/02/2024 15:17
(Adds crown move, trader comment, updates prices)
By Boldizsar Gyori
BUDAPEST, Feb 5 (Reuters) - A stronger dollar pressured
Central Europe's currencies on Monday, knocking the Polish zloty
and Hungarian forint off recent highs and pushing the Czech
crown to a 21-month low beyond the psychological 25 per euro
level.
The shift downward comes before a few interest rate meetings
in the region this week.
On Thursday, markets are betting the Czech central bank will
follow up a December rate cut with a bigger 50 basis point
reduction, although a slight majority of analysts in a Reuters
poll forecast the bank to be more cautious as it awaits
inflation data from the start of the year that is due out later
this month.
In Poland, the central bank is likely to continue a pause in
its own easing cycle on Wednesday.
"We see a slightly higher probability of a 25-basis-point
cut, as the Czech central bank may prefer to remain cautious
before seeing January’s inflation footprint," Erste Group Bank
analysts said in a note.
The Czech crown EURCZK= extended losses in afternoon trade
on Monday to hit a 21-month low of 25.032 to the euro, before
bouncing back to trade at 24.98 at 1340 GMT, down 0.2% on the
day.
Some Czech central bankers have said in the past week they
could back a sharper rate cut this week now that the bank has
joined peers in Central Europe in easing policy as inflation
slows.
A Prague trader said more crown weakening was likely on the
cards going into the meeting, but likely not enough to deter the
central bank from continuing policy easing or even possibly
opting for a bigger cut on Thursday.
"I think they have good space for cuts... Board members will
have serious reason for slower rate cuts when the crown-euro
exchange rate will be around 26, but not earlier," the trader
added.
On stock markets, Prague's PX index .PX inched up to a
fresh 2-year high on Monday.
Elsewhere in the region, markets were driven by the strength
of the U.S. dollar as traders clawed back bets for aggressive
rate cuts by the Federal Reserve this year.
A U.S. jobs report last week far exceeding market
expectations reinforced Fed Chair Jerome Powell's statement that
a March rate cut is unlikely.
The Polish zloty EURPLN= traded at 4.341 to the euro, down
0.1% and falling a touch further from a seven-week high of
4.3065 hit last Thursday.
Hungary's forint EURHUF= traded at 386.5, and was off a
nearly two-week high of 382.30 touched at the end of last week.
CEE SNAPSH AT
MARKETS OT 1540
CET
CURREN
CIES
Latest Previo Daily Change
us
bid close change in
2024
EURCZK Czech 0 0
EURHUF Hungary 00 00
EURPLN Polish %
EURRON Romania
EURRSD Serbian 00 50 % %
Note: calcula 1800
daily ted CET
change from
Latest Previo Daily Change
us
close change in
2024
.PX Prague .PX 1464.7 1457.3 +0.51 +3.58
1 100 % %
.BUX Budapes .BUX 65130. 65290. -0.24% +7.44
t 64 31 %
.WIG20 Warsaw <.WIG20 2350.6 2350.4 +0.01 +0.33
> 5 4 % %
.BETI Buchare .BETI 15761. 15640. +0.77 +2.54
st 31 73 % %
Spread Daily
vs change
Bund in
Czech spread
Republi
c
CZ2YT= ps
CZ5YT= ps
CZ10YT ps
Poland
PL2YT= ps
PL5YT= ps
PL10YT ps
FORWARD
3x6 6x9 9x12 3M
interb
ank
Czech
Hungary
Poland
Note: are for ask
FRA prices
quotes
****************************************
**********************
(Reporting by Boldizsar Gyori in Budapest, Pawel Florkiewicz in
Warsaw and Jason Hovet in Prague; editing by Mark Heinrich)
((boldizsar.gyori@thomsonreuters.com))
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