CEE MARKETS-Forint weaker ahead of central bank meet, crown leads losses

  • 3/23/2021
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PRAGUE, March 23 (Reuters) - The forint eased on Tuesday ahead of a Hungarian central bank rate meeting in which the currency"s recent weakening to near historic lows will likely be on the agenda, while central European assets faced pressure. Stocks mostly fell and currencies dropped, with the crown leading losses with a 0.5% fall, as the U.S. dollar gained and the COVID-19 pandemic situation worsened in parts of central Europe. On Tuesday, the Hungarian central bank is likely to leave its key interest rates steady, but with the weak forint and inflation rising, it may need to tighten short-term rates in the next few months, a Reuters poll has shown. The market will focus on comments at a 1400 GMT news conference after the rate decision an hour earlier. The forint was down 0.2% at 367.00 to the euro at 1049 GMT, after nearly bumping against an all-time low of 369.54 last week. "A few upside risks to inflation have appeared recently, which the statement could mention," said brokerage Equilor in a note, pointing to a rise in oil prices and the weakening of the forint which makes imports more expensive as some of the risks. Commerzbank said real rates in Hungary remain in negative territory, hampering the forint. Things will get rough for the currency if the central bank continues to hesitate signalling a rise in key rates and if inflation remains high, Commerzbank said. Elsewhere, the crown dropped to an 11-day low hit by London bank selling, a dealer said, who added it could make up some ground on Wednesday. Analysts expect the central bank to hold its key rate at 0.25% at a Wednesday meeting although most see the likelihood the bank could begin raising rates later this year. Central bankers have cautioned against a rush in hiking rates as the pandemic"s impact remains unclear. The Czech Republic and other central European countries are dealing with a surge in cases and extended lockdown measures. Elsewhere, the Polish zloty eased 0.3% and Romania"s leu was flat. On stock markets, Prague gained, but Warsaw and Budapest lost up to 1%. CEE SNAPSHO AT MARKETS T 1149 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 Note: calcula 1800 daily ted CET change from STOCKS Latest Previou Daily Change s close change in 2021 .PX Prague 1086.34 1084.65 +0.16% +5.76% 00 .BUX Budapest 43549.8 43851.9 -0.69% +3.43% 4 6 .WIG20 Warsaw <.WIG20 1909.83 1929.12 -1.00% -3.74% > .BETI Buchares 10898.2 10882.9 +0.14% +11.14 t 7 8 % .SBITO Ljubljan <.SBITO 989.24 989.81 -0.06% +9.81% P a P> .CRBEX Zagreb <.CRBEX 1857.04 1856.34 +0.04% +6.77% > .BELEX Belgrade <.BELEX 739.14 758.49 -2.55% -1.27% 15 15> .SOFIX Sofia <.SOFIX 491.79 490.36 +0.29% +9.89% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year s CZ5YT= 5-year s CZ10YT s Poland PL2YT= 2-year s PL5YT= 5-year s PL10YT s FRA 3x6 6x9 9x12 3M interba nk Czech Hungary Poland Note: FRA quotes are for ask prices *********************************** *************************** (Reporting by Jason Hovet in Prague and Anita Komuves in Budapest; Editing by Amy Caren Daniel)

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