PX

CEE MARKETS-Zloty touches nearly 8-week low as FX hit selling pressure

Credit: REUTERS/Agencja Gazeta

By Boldizsar Gyori

BUDAPEST, Jan 15 (Reuters) - The Polish zloty fell to a nearly eight-week low and weakened for a third straight day on Monday, leading losses among central Europe's currencies as slowing inflation in the region pushes investors' interest rate outlooks lower.

The zloty, the biggest lossmaker in central Europe so far in 2024, has had the added drag of simmering political disputes between the new pro-European government and the president, who is an ally of the previous ruling party, the nationalist Law and Justice (PiS).

On Monday, a new front opened with a presidential aide saying the justice minister acted illegally in dismissing state prosecutor Dariusz Barski.

Markets were also watching the start of the Davos World Economic Forum, where European Central Bank policymakers will speak and may provide clues on the timing of the first euro zone rate cuts ahead.

Hungarian, Polish and Czech rate-setters have already started easing policy, and December inflation data published in recent weeks has supported views of more rate cuts ahead, which would cut further into the rate differential with the euro zone.

"The market is starting to price in more cutting than we expect, not only due to global direction but also inflation surprising to the downside," ING said.

"CEE FX remains the last island of resistance within the emerging market space, which is under selling pressure this year. However, last week proved that the CEE region is not the exception and bearish sentiment has arrived here, too."

The Polish zloty EURPLN= led losses, losing 0.4% to the euro by 1001 GMT, as it came under pressure due to risk-off sentiment, according to a Warsaw-based trader.

Final Polish inflation data published on Monday was a touch above a flash estimate but still below analyst expectations.

On Friday, Hungary's annual December inflation came in at 5.5%, well below forecasts, fuelling expectations of bigger rate cuts by the National Bank of Hungary, which has cut more than 700 basis points since it began easing in May 2023.

Czech inflation also slowed more than expected last month.

The Hungarian forint EURHUF= followed the zloty lower on Monday, trading at 379.6 to the euro. The Czech crown EURCZK= slightly strengthened to 24.69.

CEE MARKETS

SNAPSHOT

AT 1101 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2024

EURCZK=

Czech crown

EURCZK=

24.6900

24.7000

+0.04%

+0.05%

EURHUF=

Hungary forint

EURHUF=

379.6000

379.2000

-0.11%

+0.94%

EURPLN=

Polish zloty

EURPLN=

4.3730

4.3570

-0.37%

-0.65%

EURRON=

Romanian leu

EURRON=

4.9735

4.9726

-0.02%

+0.02%

EURRSD=

Serbian dinar

EURRSD=

117.2000

117.2200

+0.02%

+0.04%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2024

.PX

Prague

.PX

1458.48

1457.4700

+0.07%

+3.14%

.BUX

Budapest

.BUX

63503.17

63628.13

-0.20%

+4.76%

.WIG20

Warsaw

.WIG20

2227.28

2248.58

-0.95%

-4.94%

.BETI

Bucharest

.BETI

15751.26

15776.45

-0.16%

+2.47%

Spread

Daily

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

4.2190

0.0030

+168bps

-3bps

CZ5YT=RR

5-year

CZ5YT=RR

3.6910

0.0490

+159bps

+2bps

CZ10YT=RR

10-year

CZ10YT=RR

3.7910

0.0260

+162bps

+0bps

Poland

PL2YT=RR

2-year

PL2YT=RR

5.0350

0.0680

+249bps

+4bps

PL5YT=RR

5-year

PL5YT=RR

4.9880

0.0440

+289bps

+2bps

PL10YT=RR

10-year

PL10YT=RR

5.1250

0.0060

+296bps

-2bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

5.67

4.60

3.67

6.62

Hungary

HUFFRABUBOR=

7.61

6.03

5.14

9.74

Poland

PLNFRAWIBOR=

5.74

5.42

5.03

5.86

Note: FRA quotes

are for ask prices

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

(Reporting by Boldizsar Gyori in Budapest, Alan Charlish in Warsaw and Jason Hovet in Prague)

((boldizsar.gyori@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.

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