CEE MARKETS-Forint weakens as inflation hits 3-year low, crown finds footing after fall
09/02/2024 09:11
By Boldizsar Gyori
BUDAPEST, Feb 9 (Reuters) - Hungary's forint led losses
in the region early on Friday after January inflation slowed to
a three-year low, while the Czech crown stabilised after
Thursday's bold rate cut by the country's central bank.
Hungarian headline inflation HUCPIY=ECI slowed to an
annual 3.8% in January from 5.5% in December, below analysts'
expectations of 4.4%, the Central Statistics Office (KSH) said
on Friday.
Hungary's forint EURHUF= weakened by 0.3% during early
trading hours but then recouped some losses to trade at 389.1 by
0847 GMT.
Average inflation for 2023 was 17.6%.
"The market believes that with inflation receding, the
central bank will cut (rates by) 1% next time, and this
expectation weakens the forint" a Budapest-based trader said.
"Although the base rate is still the highest in the region
(at 10%), some traders might be scared away from investing due
to political tensions with the European Union, so that
attractive rate-difference can only partially help the forint,"
the trader added.
Hungary's Prime Minister Viktor Orban has clashed repeatedly
with the European Union over the rule of law and other issues
that have seen EU funds to the country frozen.
Elsewhere in the region, the Czech crown EURCZK= started
the session by edging towards a fresh low since 2022 of 25.26
per euro. It weakened almost 1% to hit a 21-month low following
yesterday's cut. But it had recovered to 25.25 by 0847 GMT.
The Czech National Bank's board accelerated its policy
easing on Thursday by cutting its main repo rate by 50 basis
points to 6.25%.
Czech forward rate agreements for 9x12 - showing the
three-month market rate nine months from now - were further down
at 3.20% on Friday, from 3.31% on Thursday. They had fallen from
3.54% before Thursday's central bank meeting.
This reflected a sharp cut in the implied interest rate
trajectory in the central bank's new forecast on Thursday, which
sees the three-month PRIBOR, a proxy for official rates, below
3% by the fourth quarter.
Governor Ales Michl said the board would remain more hawkish
than the forecast, but this still leaves ample room for cuts.
"In the coming months, we believe that more forceful rate
cuts of at least 50bps will become the new norm," CSOB bank said
in a report.
"At the end of this year, we expect interest rates to be at
4%."
The Polish zloty EURPLN= firmed slightly on Friday.
CEE SNAPSH AT
MARKETS OT 0947
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 1461.9 1462.9 -0.07% +3.39
7 500 %
.BUX Budapes .BUX 64473. 64442. +0.05 +6.36
t 77 63 % %
.WIG20 Warsaw <.WIG20 2304.5 2318.8 -0.62% -1.64%
> 5 9
.BETI Buchare .BETI 15771. 15721. +0.32 +2.61
st 95 62 % %
Spread Daily
vs change
Bund in
Czech spread
Republi
c
CZ2YT= 0 ps
CZ5YT= 0 ps
CZ10YT 0 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, Jan Lopatka in
Prague, writing by Boldizsar Gyori
Editing by Gareth Jones)
((boldizsar.gyori@thomsonreuters.com))
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