CEE MARKETS-Hungarian forint sinks to record low, underperforming region

Credit: REUTERS/Bernadett Szabo

The Hungarian forint fell 0.2% on Wednesday morning to a record low of 332 to the euro, underperforming other central European currencies.

By Gergely Szakacs

BUDAPEST, Sept 11 (Reuters) - The Hungarian forint EURHUF= fell 0.2% on Wednesday morning to a record low of 332 to the euro, underperforming other central European currencies.

At 0834 GMT, the forint traded at 332.1 versus the euro, extending its losses for the year to more than 3%, the worst in the region. Traders said the forint had decoupled from other central European currencies in recent days.

Economists at Erste Investment said foreign players unwinding stock market positions were probably one reason for the forint's weakness. Another was the central bank's maintaining high interbank liquidity at a Monday tender.

Although inflation rose to the central bank's 2% to 4% target range in the first half, the bank has maintained its accommodative stance after a moderate tightening move in March.

Inflation has slowed down since then, in line with the expectations of the central bank. In August, headline inflation was 3.1%, below forecasts. The next rate meeting is due on Sept. 24.

The Erste economists said a back-and-forth between Central Bank Governor Gyorgy Matolcsy and Finance Minister Mihaly Varga early this week also contributed to a weakening forint.

"On the whole, we do not consider any of these reasons strong enough or a major departure from previous economic policy that would justify this spectacular weakening of the forint," the analysts said. "Therefore, we think that this extent of the forint's weakness should be temporary."

The European Central Bank is widely expected to introduce monetary easing and stimulus measures on Thursday, to offset the effects of an ongoing U.S.-Sino trade war and a global economic slowdown.

One currency trader in Budapest said ECB easing may provide temporary respite to the forint, but was probably not enough in itself to reverse an easing bias in the currency.

The zloty EURPLN= was steady ahead of a Polish Monetary Policy council meeting on Wednesday, where the central bank is expected to keep its benchmark rate at a record low 1.5%.

"The global growth uncertainty and monetary easing abroad give the MPC good reasons to stick to wait-and-see approach and keep rates stable for longer," economists at Santander said in a note. "We continue to expect unchanged rates this year and next."

The leu EURRON= was steady after Romania's consumer price inflation slowed to 3.9% on the year in August from July's 4.1%, above market expectations of 3.8% and the central bank's target range.

"While inflation is still above the NBR’s target and will remain so in next months, calling for tight monetary policy, the external environment works in the opposite direction, preventing a potential hike in the policy rate due to market expectations about a loosening of the ECB’s monetary policy," analysts at BCR said in a note.

CEE MARKETS

SNAPSHOT

AT 1034 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

EURCZK=

Czech crown

EURCZK=

25.8750

25.8520

-0.09%

-0.65%

EURHUF=

Hungary forint

EURHUF=

332.1000

331.3500

-0.23%

-3.32%

EURPLN=

Polish zloty

EURPLN=

4.3329

4.3335

+0.01%

-1.00%

EURRON=

Romanian leu

EURRON=

4.7335

4.7315

-0.04%

-1.68%

EURHRK=

Croatian kuna

EURHRK=

7.3945

7.3925

-0.03%

+0.21%

EURRSD=

Serbian dinar

EURRSD=

117.6100

117.5100

-0.09%

+0.59%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

.PX

Prague

.PX

1039.91

1035.0400

+0.47%

+5.41%

.BUX

Budapest

.BUX

40060.79

39956.96

+0.26%

+2.36%

.WIG20

Warsaw

.WIG20

2198.77

2187.80

+0.50%

-3.42%

.BETI

Bucharest

.BETI

9226.61

9229.37

-0.03%

+24.96%

.SBITOP

Ljubljana

.SBITOP

848.38

850.55

-0.26%

+5.49%

.CRBEX

Zagreb

.CRBEX

1878.24

1881.28

-0.16%

+7.40%

.BELEX15

Belgrade

.BELEX15

753.99

751.84

+0.29%

-1.01%

.SOFIX

Sofia

.SOFIX

574.29

576.29

-0.35%

-3.39%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

1.2100

-0.0030

+202bps

-1bps

CZ5YT=RR

5-year

CZ5YT=RR

1.0120

-0.0660

+186bps

-7bps

CZ10YT=RR

10-year

CZ10YT=RR

1.3100

0.0030

+185bps

-1bps

Poland

PL2YT=RR

2-year

PL2YT=RR

1.5820

0.0190

+239bps

+1bps

PL5YT=RR

5-year

PL5YT=RR

1.9220

-0.0180

+277bps

-3bps

PL10YT=RR

10-year

PL10YT=RR

2.1550

-0.0130

+269bps

-3bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

2.12

2.03

1.89

2.14

Hungary

HUFFRABUBOR=

0.30

0.36

0.42

0.23

Poland

PLNFRAWIBOR=

1.74

1.72

1.71

1.72

Note: FRA quotes

are for ask prices

(Reporting by Gergely Szakacs in Budapest and Luiza Ilie in Bucharest; editing by Larry King)

((gergely.szakacs@reuters.com ; https://twitter.com/szakacsg ; +36 1 882 3606 ; https://www.reuters.com/journalists/gergely-szakacs))

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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