CEE MARKETS-Hungary's forint leads gains on rate hike expectations, markets eye Polish cenbank

  • 6/9/2021
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BUCHAREST, June 9 (Reuters) - The Hungarian forint led gains among central and eastern European currencies on Wednesday as the central bank bolstered expectations of a rate hike later this month, while the Polish zloty was also firmer ahead of a central bank meeting. Hungary"s central bank pledged to launch a decisive tightening cycle at its June 22 meeting to tackle inflation risks, its governor said on Wednesday. A hike would make Hungary the first European Union country to start raising rates, but it could soon be followed by the Czech central bank as the region"s inflation rates are the highest in the EU with economies recovering quickly from the pandemic. By 1000 GMT, the forint was up 0.4% against the euro at 347.1500. The Polish zloty and the Czech crown were each up 0.2%. Poland"s central bank is expected to leave its main interest rate unchanged at 0.1% at its rate-setting meeting on Wednesday, although inflation stood well above target at 4.8% in May. While central bank governor Adam Glapinski has previously said that rates are likely to remain on hold until 2022, some economists now expect a rate hike this year. "The MPC"s wording might become increasingly restrictive, for example by stating that inflation risks are to the upside or that rate hikes might have to be debated over the coming months rather than in mid-2022," Commerzbank said in a note. "We nonetheless remain cautious: even in case of a symbolic rate hike the real interest rate will remain clearly in negative territory over the coming quarters and will prevent a sustainable appreciation trend of the zloty medium-term." Elsewhere in the region, the Romanian leu was flat on the day. Analysts expect Romania"s central bank to keep rates on hold at 1.25% throughout this year. Policymakers expect inflation at 4.1% in December, above their 1.5-3.5% target. Stocks in the region were mixed, with Bucharest"s bluechip index up 0.6% and Prague"s equities 0.3% higher. Budapest"s was down 1.4% and Warsaw"s inched 0.2% lower. CEE SNAPSHO AT MARKETS T 1215 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 Czech Hungary 0 0 Polish Romanian Croatian Serbian 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 Prague 1181.22 1177.99 +0.27% +15.00 00 % Budapest 47821.5 48546.4 -1.49% +13.57 6 5 % Warsaw 2232.84 2237.61 -0.21% +12.54 % Buchares 11387.5 11317.4 +0.62% +16.13 t 4 0 % Ljubljan <.SBITOP 1130.73 1135.59 -0.43% +25.52 a > % Zagreb 1950.21 1949.56 +0.03% +12.13 % Belgrade <.BELEX1 782.34 780.08 +0.29% +4.51% 5> Sofia 538.09 535.17 +0.55% +20.24 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year s 5-year s s Poland 2-year s 5-year s s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.74 1.00 1.32 0.41 Rep Hungary 1.32 1.55 1.71 0.92 Poland 0.38 0.57 0.78 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Luiza Ilie in Bucharest, Anita Komuves in Budapest and Alan Charlish in Warsaw; Editing by Kirsten Donovan) Our Standards: The Thomson Reuters Trust Principles.

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