CEE MARKETS-Forint leads CEE losses; market eyes no Hungarian rate surprise

Credit: REUTERS/Bernadett Szabo

Hungary's forint led losses among Central European currencies on Monday, extending last week's falls, with investors largely expecting the central bank to keep rates steady during its Tuesday meeting.

By 0920 GMT, the forint EURHUF= eased 0.2% to trade at 364.91 after having fallen to as low as 365 to the euro earlier in the session.

Over the past week, the region witnessed a spike in COVID-19 infections, passing milestones of deaths and new cases nearly every day, which kept investors wary.

"We expect a wait-and-see approach in the forint market today ahead of tomorrow's central bank's rate meeting," brokerage Equilor said in a note.

The bank is likely to leave its base rate unchanged at 0.6% on Tuesday after weaker-than-expected September consumer prices data eased some concerns about inflation, a Reuters poll of economists showed.

"The significant slowdown of inflation in September eased the pressure on the central bank," CIB Bank wrote in a note.

"Thus we do not expect a change in the base rate for a while, the bank could manage the forint's exchange rate using the one-week deposit tender if need be."

Of the eight economists who gave a forecast for the one-week deposit rate at the end of next month in a Reuters poll, six said it would stay at the current 0.75% level, with two analysts projecting another 15-basis-point increase over the coming weeks to 0.9%.

Deputy Governor Barnabas Virag said the bank would use this as a "fast response" tool, if needed, adding that renewed risk aversion posed the biggest risk to the inflation outlook.

Elsewhere, the Czech crown EURCZK= and the Polish zloty EURPLN= both edged 0.1% down to trade at 27.2850 and 4.5485, respectively. The Romanian leu EURRON= was flat at 4.8765.

Czech bond yields mostly ticked higher, continuing a correction trend as markets keep an eye on 2021 budget preparations, with the deficit expected to stay next year.

"Czech yields continued to edge higher in a correction after yield declines in September. This is something that we had expected," Erste Group Bank said.

CEE MARKETS

SNAPSHOT

AT 1120 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

Czech crown

EURCZK=

27.2850

27.2600

-0.09%

-6.79%

Hungary forint

EURHUF=

365.0000

364.0600

-0.26%

-9.28%

Polish zloty

EURPLN=

4.5485

4.5450

-0.08%

-6.42%

Romanian leu

EURRON=

4.8775

4.8780

+0.01%

-1.83%

Croatian kuna

EURHRK=

7.5830

7.5825

-0.01%

-1.81%

Serbian dinar

EURRSD=

117.5000

117.6000

+0.09%

+0.06%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2020

Prague

.PX

871.55

867.0800

+0.52%

-21.88%

Budapest

.BUX

33339.58

33225.15

+0.34%

-27.65%

Warsaw

.WIG20

1663.97

1655.36

+0.52%

-22.61%

Bucharest

.BETI

8902.32

8874.99

+0.31%

-10.77%

Ljubljana

.SBITOP

831.67

839.52

-0.94%

-10.17%

Zagreb

.CRBEX

1606.50

1605.28

+0.08%

-20.37%

Belgrade

.BELEX15

691.00

692.01

-0.15%

-13.81%

Sofia

.SOFIX

429.59

429.83

-0.06%

-24.39%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

0.0940

0.0080

+087bps

+1bps

5-year

CZ5YT=RR

0.6250

0.0260

+143bps

+3bps

10-year

CZ10YT=RR

1.0440

0.0390

+167bps

+4bps

Poland

2-year

PL2YT=RR

0.0150

-0.0010

+079bps

+0bps

5-year

PL5YT=RR

0.4950

0.0060

+130bps

+1bps

10-year

PL10YT=RR

1.2960

0.0120

+192bps

+1bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.26

0.25

0.31

0.35

Hungary

HUFFRABUBOR=

0.94

0.97

0.99

0.77

Poland

PLNFRAWIBOR=

0.14

0.13

0.12

0.22

Note: FRA quotes

are for ask prices

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

(Additional reporting by Jason Hovet in Prague; Editing by Ramakrishnan M.)

((radu.marinas@thomsonreuters.com; +40 21 527 04 33))

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

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