PX

CEE MARKETS-Forint falls quickly to one-year low while zloty eyes new peaks

Credit: REUTERS/LASZLO BALOGH

Updates lead, prices after forint drop to fresh low, trader comment in paragraph 4

PRAGUE, March 12 (Reuters) - Hungary's forint fell to a one-year low on Tuesday, losing 1% and on course for its biggest one-day drop since September amid renewed nerves over EU funds for Budapest and as interest rates come down quickly.

The forint, which is also facing pressure from a dispute between the government and central bank over the pace of rate cuts, underperformed its central European peers, with Poland's zloty hovering near a four-year high hit in the previous session.

Politico reported the European Parliament was preparing to sue the European Commission over its decision to unfreeze billions of euros in funds for Hungary that had been locked up in rule-of-law disputes.

"It is the European Parliament's decision to sue the Commission that drove the forint low," one FX trader in Budapest said.

The forint EURHUF= dropped more than 1% in afternoon trade to a low of 398.60, its weakest level since last March, and traded down at 398.20 at 1323 GMT.

The European Parliament's action against the EU executive is for breaching an obligation to protect taxpayers' money, Politico reported.

The Commission restored Hungary's access to 10.2 billion euros of frozen funds in December 2023 saying Budapest had implemented reform of its judiciary. But 21.1 billion euros remain locked.

On the domestic front, a rift between Prime Minister Viktor Orban's government and the central bank - which has said "attacks" by politicians could backfire and limit policy easing - is adding unease to the market.

The government on Wednesday is likely to discuss a law change widening its oversight over the central bank, a move the bank's governor has criticised.

In Poland, the zloty EURPLN=weakened and traded at 4.2865 per euro, after touching a multi-year high on Monday, at 4.275.

The zloty has been a darling among central European currencies, gaining 1.4% this year as the Polish central bank maintains stable interest rates - after two cuts last September and October - while Hungarian and Czech central bankers ease policy.

The Czech crown EURCZK= was 0.1% higher at 25.281 to the euro. It has stabilised in recent weeks after reaching two-year lows beyond 25.50 last month.

Czech inflation data on Monday showed price growth was back at the central bank's 2% target last month, keeping the path for rate cuts clear. Central bankers, though, have said rate cuts will be gradual and cautious.

"The Czech crown recovered modestly against the euro in recent weeks, but we would not be surprised if the currency were to come under renewed downside pressure again," Commerzbank said.

"The prior recovery was achieved by fire-fighting verbal intervention by central bankers that a weaker crown would slow down or entirely derail rate cuts."

CEE MARKETS

SNAPSHOT

AT 1423 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2024

EURCZK=

Czech crown

EURCZK=

25.2810

25.3130

+0.13%

-2.29%

EURHUF=

Hungary forint

EURHUF=

398.2000

394.4500

-0.94%

-3.77%

EURPLN=

Polish zloty

EURPLN=

4.2865

4.2820

-0.10%

+1.35%

EURRON=

Romanian leu

EURRON=

4.9665

4.9660

-0.01%

+0.16%

EURRSD=

Serbian dinar

EURRSD=

117.1600

117.2100

+0.04%

+0.07%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2024

.PX

Prague

.PX

1466.63

1465.7900

+0.06%

+3.72%

.BUX

Budapest

.BUX

65797.76

65599.49

+0.30%

+8.54%

.WIG20

Warsaw

.WIG20

2380.70

2370.39

+0.43%

+1.61%

.BETI

Bucharest

.BETI

16239.57

16241.58

-0.01%

+5.65%

Spread

Daily

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

3.6050

0.0310

+079bps

-1bps

CZ5YT=RR

5-year

CZ5YT=RR

3.5390

0.0300

+120bps

+0bps

CZ10YT=RR

10-year

CZ10YT=RR

3.7050

0.0260

+138bps

+0bps

Poland

PL2YT=RR

2-year

PL2YT=RR

5.1520

0.1120

+234bps

+7bps

PL5YT=RR

5-year

PL5YT=RR

5.2180

0.0390

+287bps

+1bps

PL10YT=RR

10-year

PL10YT=RR

5.3630

0.0490

+304bps

+3bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

4.66

3.71

3.14

5.94

Hungary

HUFFRABUBOR=

6.72

6.02

6.00

8.08

Poland

PLNFRAWIBOR=

5.83

5.76

5.47

5.86

Note: FRA quotes

are for ask prices

**************************************************************

(Reporting by Jason Hovet in Prague and Anita Komuves and Boldizsar Gyori in Budapest; editing by Christina Fincher and Nick Macfie)

((jason.hovet@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.