CEE MARKETS-Crown falls sharply as central bank ends FX regime, forint falls deeper

Societatea de Producere a Energiei Electrice in Hidrocentrale Hidroelectrica SA

03/08/2023 14:53

(Updates after Czech central bank, adds Hidroelectrica)
    By Boldizsar  Gyori and Jason Hovet
       BUDAPEST, Aug 3 (Reuters) - The crown sank to its lowest
level of 2023 on Thursday after the Czech National Bank (CNB)
kept interest rates flat but formally ended an exchange rate
intervention regime to support the crown, while Hungarian
forint's recent losses deepened.
    The crown fell more than 1% immediately after the Czech
bank's announcement, to 24.26 to the euro, before settling down
0.8% at 24.20 to the euro ahead of the governor's planned news
conference to detail the decisions.
    The bank ended a crown regime in place for over a year but
not used since late 2022. Some analysts said the move could be
the start of the bank loosening policy after a huge rise in
interest rates since 2021 to counter surging inflation.
    Markets in central Europe are betting on which central banks
will follow Hungary in easing policy already as inflation
recedes and economies in the region stagnate. Investors are
betting on a sharp drop in Czech rates this year.
    In Hungary, the forint  EURHUF=  continued recent falls and
broke beyond the 390 per euro level to trade at 393.00, a more
than four-month low.
    However, analysts in a Reuters poll see ground for the
forint for renewed strengthening over the next 12 months, backed
by its high carry as Hungarian rates are still the highest in
the European Union.
    Elsewhere, the Polish zloty  EURPLN=  lost half a percent
amid weaker global sentiment and falling stock markets.
    In Romania, utility Hidroelectrica's  ROH2O.BX  shares
traded below their IPO debut price of 110 lei for the first time
since the company listed in Bucharest in July.
    

 (Reporting by Karol Badohal in Warsaw, Jason Hovet in Prague
and Boldizsar Gyori in Budapest; Editing by Sharon Singleton,
Rashmi Aich and Shilpi Majumdar)
 ((karl.badohal@thomsonreuters.com))
 
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