CEE MARKETS-Forint rebounds as central banker sees no room to cut rates further

Credit: REUTERS/Bernadett Szabo

The Hungarian forint rebounded against the euro in late Tuesday trade after a top Hungarian central banker reiterated that there was no room to cut short-term rates any further.

By Anita Komuves

BUDAPEST, Aug 25 (Reuters) - The Hungarian forint rebounded against the euro in late Tuesday trade after a top Hungarian central banker reiterated that there was no room to cut short-term rates any further.

At its meeting earlier on Tuesday, Hungary's central bank left its base rate unchanged at 0.6%, as expected, and announced that it would increase the amount of its weekly government bond purchases.

Bond yields were unchanged immediately after the announcement, a fixed income trader said in Budapest.

The forint EURHUF= reached a one-month low, trading 0.6% lower against the euro at around 354 after the meeting.

However, it rebounded to 352.22 by 1433 GMT, after deputy Governor Barnabas Virag told an online briefing the bank has no room to cut short-term rates further. nS8N2DB0AA

The central bank, which cut its base rate in June and July, said in a statement after the rate decision that it expects the disinflationary effects of the coronavirus pandemic to rein in price growth over its monetary policy horizon.

Markets were closely watching the bank's comments on higher-than-expected inflation and economic recovery as inflation came in at an annual 3.8% in July and GDP dropped by 13.6% year-on-year in the second-quarter.

"If the central bank were to sound more dovish, the downward trend in HUF might continue in the near future," Commerzbank wrote before the decision.

Elsewhere, the zloty EURPLN= and the Czech crown EURCZK= were stable.

"The Czech koruna is currently trading close to our target of EUR/CZK 26.0 for the end of the year," Raiffeisen said.

However, it is "not going to appreciate to the levels we (saw) before the pandemic shock ... The interest rate differential with the euro area declined significantly."

CEE MARKETS

SNAPSHOT

AT 1633 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

Czech crown

EURCZK=

26.1720

26.1000

-0.28%

-2.83%

Hungary forint

EURHUF=

352.2200

351.9000

-0.09%

-5.98%

Polish zloty

EURPLN=

4.3955

4.3945

-0.02%

-3.16%

Romanian leu

EURRON=

4.8419

4.8395

-0.05%

-1.11%

Croatian kuna

EURHRK=

7.5280

7.5325

+0.06%

-1.10%

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

909.05

899.9400

+1.01%

-18.52%

Budapest

.BUX

35740.01

35994.83

-0.71%

-22.44%

Warsaw

.WIG20

1820.47

1841.46

-1.14%

-15.33%

Bucharest

.BETI

8804.64

8737.14

+0.77%

-11.75%

Ljubljana

.SBITOP

851.71

854.80

-0.36%

-8.01%

Zagreb

.CRBEX

1616.99

1609.00

+0.50%

-19.85%

Belgrade

.BELEX15

691.16

692.10

-0.14%

-13.79%

Sofia

.SOFIX

433.71

435.17

-0.34%

-23.66%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

0.1260

0.0080

+077bps

-2bps

5-year

CZ5YT=RR

0.6840

-0.0100

+133bps

-6bps

10-year

CZ10YT=RR

1.0410

0.0300

+147bps

-3bps

Poland

2-year

PL2YT=RR

0.1490

0.0000

+080bps

-3bps

5-year

PL5YT=RR

0.7700

0.0050

+141bps

-4bps

10-year

PL10YT=RR

1.3600

0.0120

+179bps

-5bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.36

0.36

0.43

0.34

Hungary

HUFFRABUBOR=

0.76

0.84

0.90

0.61

Poland

PLNFRAWIBOR=

0.23

0.24

0.25

0.23

Note: FRA quotes

are for ask prices

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

(Additional reporting by Jason Hovet in Prague Editing by Susan Fenton)

((komuves.anita@thomsonreuters.com (+36 70 795 8815))

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

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More