CEE MARKETS-Forint seeks to recover after battering ahead of Hungary rate decision

OTP Bank Nyrt.

17/06/2024 10:06

By Boldizsar  Gyori
       BUDAPEST, June 17 (Reuters) - The forint came out the
gate stronger on Monday after suffering one of its worst weeks
so far in 2024 as its recent weakening tested the Hungarian
central bank's rate-cutting cycle.
    Hungary's forint lost close to 2% last week and floated back
near the psychological 400 per euro and touched a 2-1/2-month
low at 398.50 as a firming dollar and a risk-off mood prevailed
in global markets.
    By 0849 GMT on Monday, the forint was 0.5% stronger from
Friday's close, at 396.3 to the euro.
    "Everybody is waiting for tomorrow's rate-cut, but there is
uncertainty whether (the central bank) will actually cut this
time," a local trader said. "With the forint at this level a
further rate cut would send it down a weakening path."
    Hungary's central bank is narrowly seen opting for the
smallest rate cut in its 14-month-old easing cycle on Tuesday, a
Reuters poll showed, with the majority projecting a 25-bps
reduction, bringing Hungary's key rate  HUINT.ECI  down to 7%.
    The bank has slashed borrowing costs by 1,075 basis points
since May 2023, aided by a retreat in price growth from levels
exceeding 25% in the first quarter of last year.
    The Czech central bank has also maintained an easing cycle
since last year, although markets are weighing whether it was
set to slow its cutting pace as well. 
    The crown  EURCZK=  has held to stronger levels since the
last policy meeting in May and was up a touch on Monday at 24.78
per euro.
    The Polish zloty  EURPLN=  also looked to rebound after
closing last week at its weakest level since late January, hit
like the forint by market jitters in the wake of European
Parliament elections that saw the far-right gain.
    "It is difficult to predict how long the heightened risk
aversion in global markets will persist, but the approach of the
French and UK elections may not be conducive to market calming
down in the next two weeks," Santander Bank Polska said.
    "As a result, EURPLN could remain under pressure."
                   CEE       SNAPSHO   AT                       
                   MARKETS   T        1049 CET           
                             CURRENC                            
                             IES                         
                             Latest   Previous  Daily    Change
                             bid      close     change   in 2024
 EURCZK=  Czech                                         
 EURHUF=  Hungary                 0                     
 EURPLN=  Polish                                        
 EURRON=  Romania                                       
                                                                
          Note:    calculat                     1800            
          daily    ed from                      CET      
          change                                         
                                                                
                             Latest   Previous  Daily    Change
                                      close     change   in 2024
 .PX      Prague    .PX      1517.49  1516.670   +0.05%   +7.32%
                                             0           
 .BUX     Budapes   .BUX     69792.8  69536.56   +0.37%   +15.13
          t                        5                           %
 .WIG20   Warsaw    .WIG20   2428.87   2413.73   +0.63%   +3.67%
 .BETI    Buchare   .BETI    17742.1  17703.59   +0.22%   +15.43
          st                       1                           %
                                                                
                                                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  
          Note:    are for                                      
          FRA      ask                                   
          quotes   prices                                
          **************************                            
          **************************                     
          **********                                     
 

    
    

 (Reporting by Boldizsar Gyori in Budapest; Editing by Shailesh
Kuber)
 ((boldizsar.gyori@thomsonreuters.com;))
 
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