UPDATE 1-CEE MARKETS-Crown firms on hawkish signals from c.bank

  • 5/6/2021
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(Recasts with Czech rate decision) May 6 (Reuters) - The Czech crown erased early losses and hit a 2-1/2 month high on Thursday after the Czech central bank"s governor said a rate hike was certain this year, while market rates added to bets that tightening was getting nearer. Czech Central Bank Governor Jiri Rusnok said on Thursday that the bank will certainly raise interest rates in 2021 and the board will debate tightening already in June. The crown was 0.19% firmer against the euro at 25.738 at 1537 GMT, after having traded as much as 0.29% weaker earlier in the day. Shorter-term forward rate agreements and interest rate swaps rose 5-10 basis points. "I think the market was strongly surprised" by the hawkish comments, a trader said. "We might start pricing in some odds for a June (hike) already." The seven-member board voted unanimously to keep the main two-week repo rate at 0.25%, where it has been for the past year. On Wednesday the Polish central bank kept its main interest rate at an all-time low of 0.1% despite saying that it sees above-target inflation in the coming months. The Polish zloty continued to slip, weakening 0.1% to 4.575. Central Europe"s most liquid currency has been affected by worries concerning upcoming sittings of the Supreme Court concerning Swiss franc mortgages, a major risk factor for Polish banks. "Before we hear the Supreme Court ruling on the Swiss mortgage saga we expect the volatility to remain elevated," said Piotr Poplawski, senior economist at ING. Thousands of Polish borrowers took out franc loans more than a decade ago to take advantage of low Swiss interest rates but then faced ballooning repayments when the zloty weakened sharply against the Swiss currency. The Court will issue guidance on questions including the claims that banks can make from clients after mortgage contracts were cancelled. The Hungarian forint was 0.20% stronger at 358.18, after gains in the previous session. "...The rate fell under the 200-day moving average of 359.4, but we cannot yet unambiguously say that the long-term moving average was broken," Erste Bank wrote in a morning note. The bank said that the firming was due to the recent steps to gradually reopen the economy. "It"s been typical for the forint so far to react to news about the pandemic in both directions." CEE SNAPSHO AT MARKETS T 1737 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: calculated from 1800 daily CET change STOCKS Latest Previou Daily Change s close change in 2021 .PX Prague 1096.51 1101.92 -0.49% +6.75% 00 .BUX Budapest 44472.7 44142.7 +0.75% +5.62% 1 0 .WIG20 Warsaw <.WIG20 2046.67 2047.36 -0.03% +3.16% > .BETI Buchares 11505.0 11560.7 -0.48% +17.33 t 8 5 % .SBITO Ljubljan <.SBITO 1065.93 1067.32 -0.13% +18.32 P a P> % .CRBEX Zagreb <.CRBEX 1930.65 1923.39 +0.38% +11.00 > % .BELEX Belgrade <.BELEX 755.89 756.92 -0.14% +0.97% 15 15> .SOFIX Sofia <.SOFIX 522.74 522.74 +0.00% +16.81 > % 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 Alan Charlish in Warsaw, Anita Komuves in Budapest and Robert Muller and Jason Hovet in Prague; Editing by Shailesh Kuber, Alexandra Hudson) Our Standards: The Thomson Reuters Trust Principles.

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