CEE MARKETS-Forint weakens as Hungary leaves rates unchanged

Credit: REUTERS/Bernadett Szabo

The Hungarian forint weakened on Tuesday afternoon after the country's central bank left key interest rates unchanged, as expected, and announced that it would increase the amount of its weekly government bond purchases. [nL8N2FR1SD]

By Anita Komuves

BUDAPEST, Aug 25 (Reuters) - The Hungarian forint weakened on Tuesday afternoon after the country's central bank left key interest rates unchanged, 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. It could weaken further, brokerage Equilor said in a note.

"The next important resistance level is at 355.85," Equilor said. "The movement could stop there, followed by a smaller or larger negative correction. After that it can weaken towards the 360-365 range."

The central bank 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."

Shares in the region were mixed. Prague's stock market .PX led gains, rising 1.1%. Warsaw's equities .WIG20 fell 0.6%.

CEE MARKETS

SNAPSHOT

AT 1546 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

EURCZK=

Czech crown

EURCZK=

26.1220

26.1000

-0.08%

-2.64%

EURHUF=

Hungary forint

EURHUF=

354.0000

351.9000

-0.59%

-6.46%

EURPLN=

Polish zloty

EURPLN=

4.3918

4.3945

+0.06%

-3.08%

EURRON=

Romanian leu

EURRON=

4.8416

4.8395

-0.04%

-1.10%

EURHRK=

Croatian kuna

EURHRK=

7.5300

7.5325

+0.03%

-1.12%

EURRSD=

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

.PX

Prague

.PX

909.96

899.9400

+1.11%

-18.44%

.BUX

Budapest

.BUX

35817.08

35994.83

-0.49%

-22.28%

.WIG20

Warsaw

.WIG20

1829.91

1841.46

-0.63%

-14.89%

.BETI

Bucharest

.BETI

8820.50

8737.14

+0.95%

-11.59%

.SBITOP

Ljubljana

.SBITOP

851.71

854.80

-0.36%

-8.01%

.CRBEX

Zagreb

.CRBEX

1616.09

1609.00

+0.44%

-19.89%

.BELEX15

Belgrade

.BELEX15

691.16

692.10

-0.14%

-13.79%

.SOFIX

Sofia

.SOFIX

432.68

435.17

-0.57%

-23.84%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

0.1260

0.0080

+077bps

-2bps

CZ5YT=RR

5-year

CZ5YT=RR

0.7040

0.0090

+135bps

-4bps

CZ10YT=RR

10-year

CZ10YT=RR

1.0360

0.0240

+147bps

-4bps

Poland

PL2YT=RR

2-year

PL2YT=RR

0.1490

0.0000

+080bps

-3bps

PL5YT=RR

5-year

PL5YT=RR

0.7690

0.0040

+141bps

-4bps

PL10YT=RR

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=

0.75

0.82

0.88

0.61

Poland

PLNFRAWIBOR=

0.24

0.24

0.26

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.

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