CEE MARKETS-Forint firms as c.bank unexpectedly raises one-week deposit rate

Recasts with Hungarian c.bank move

WARSAW, Sept 24 (Reuters)The Hungarian forint EURHUF= firmed on Thursday, after the central bank unexpectedly raised the interest rate on its one-week deposit facility NBHK by 15 basis points to 0.75%.

The forint had weakened in recent weeks due to the impact of a second coronavirus wave on economic recovery and rising inflation. But the rate move lifted it immediately from five-month-lows around 365 versus the euro to around 363.5.

Market players said, however, that trend may not last.

At 1029 GMT the forint was 0.42% stronger on the day at 363.78.

Other Central European currencies were softer, taking a hit from a global risk sell-off on fears that rising coronavirus cases are slowing economic recovery.

Europe has seen a surge, with Poland reporting a new record daily number of cases on Thursday. In the Czech Republic, the surge has been growing at the second fastest rate in Europe when adjusted for population, behind only Spain.

“The epicentre of negative effects of the second wave of the coronavirus is in Europe. CEE currencies must compensate for expected reduced demand from Europe given the worsening business sentiment there,” said Piotr Bartkiewicz, an economist at Pekao SA.

At 1029 GMT the Polish zloty EURPLN= was 0.40% softer against the euro at 4.5285, the Czech crown EURCZK= was 0.17% weaker at 26.9870 and the Romanian leu EURRON= was 0.05% weaker at 4.8740.

The crown did not get any strong impulse from the Czech National Bank (CNB) on Wednesday after rate setters left the key rate CZCBIR=ECI unchanged at 0.25% as expected.

Stocks mostly fell, taking their cue from global markets rattled by rising infection rates and fading hopes of fresh stimulus for the U.S. economy.

The main indices in Budapest .BUX and Warsaw .WIG20 fell 1.53% and 0.65% respectively, while Prague’s PX index .PX was broadly flat.

Czech 10-year bond yields CZ10YT=RR fell just under 2 basis points to 0.865%, while Polish 10-year yields PL10YT=RR fell almost 3 basis points to 1.335%.

“…in the case of 10-year papers it will not be easy to break the 1.30% level, despite positive sentiment in the global debt market,” PKO BP analysts in Warsaw said in a note.

“Therefore, it seems more probable that the yields will return to 1.40% on the longer end of the curve.”

CEE MARKETS

SNAPSHOT

AT 1229 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

Czech crown

EURCZK=

26.9870

26.9400

-0.17%

-5.76%

Hungary forint

EURHUF=

363.7800

365.3000

+0.42%

-8.97%

Polish zloty

EURPLN=

4.5285

4.5102

-0.40%

-6.01%

Romanian leu

EURRON=

4.8740

4.8714

-0.05%

-1.76%

Croatian kuna

EURHRK=

7.5490

7.5505

+0.02%

-1.37%

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

861.93

861.6900

+0.03%

-22.74%

Budapest

.BUX

32018.95

32515.39

-1.53%

-30.52%

Warsaw

.WIG20

1674.40

1685.40

-0.65%

-22.12%

Bucharest

.BETI

9063.00

9110.46

-0.52%

-9.16%

Ljubljana

.SBITOP

839.99

834.77

+0.63%

-9.27%

Zagreb

.CRBEX

1629.57

1645.58

-0.97%

-19.23%

Belgrade

.BELEX15

688.11

688.57

-0.07%

-14.17%

Sofia

.SOFIX

424.55

425.11

-0.13%

-25.27%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

0.0710

-0.0100

+078bps

-1bps

5-year

CZ5YT=RR

0.4760

-0.0850

+120bps

-6bps

10-year

CZ10YT=RR

0.8650

-0.0180

+139bps

+0bps

Poland

2-year

PL2YT=RR

0.0480

-0.0510

+075bps

-5bps

5-year

PL5YT=RR

0.6450

-0.0260

+137bps

+0bps

10-year

PL10YT=RR

1.3350

-0.0290

+186bps

-1bps

FORWARD

3×6

6×9

9×12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.32

0.33

0.35

0.34

Hungary

HUFFRABUBOR=

1.01

1.14

1.25

0.65

Poland

PLNFRAWIBOR=

0.19

0.19

0.19

0.22

Note: FRA quotes

are for ask prices

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(Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague, Anita Komuves in Budapest, Luiza Ilie in Bucharest; Editing by Ramakrishnan M. and Andrew Cawthorne)

(([email protected]; +48 22 104 25 27 ;))

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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