BUCHAREST, Aug 6 (Reuters) - The Czech crown firmed to its
highest level since late June on Friday, following an interest
rate hike the previous day, while the Romanian leu was a touch
weaker ahead of a central bank meeting.
The Czech central bank on Thursday raised its main interest
rate by a quarter point and predicted further hikes in coming
months as it sees inflation rising more sharply than previously
forecast.
"Despite some dovish-sounding or mixed headlines, we
perceive the new forecast and its presentation as hawkish,"
Komercni Banka said in a morning note.
"The forecast implies rapid tightening in 2021 and
approximately two more hikes in 2022."
By 0820 GMT, the crown was up 0.1% against the
euro at 25.3700, its strongest level since June 24 and the
bank"s last policy meeting.
However, Erste/Ceska Sporitelna analysts warned the crown"s
strength was dampened by concerns over the pandemic.
"When the pandemic passes, the crown"s strengthening could
cause bigger monetary conditions tightening than what would be
optimal," they said in a note.
Elsewhere in the region, the Hungarian forint was
up 0.3% on the day.
Both the crown and forint were outperforming regional peers,
up 3.4% and 2.8% overall this year, respectively, as Czech and
Hungarian policymakers were the first in the European Union to
tighten interest rates since the pandemic hit.
The Polish zloty was down 0.1% on the day on
Friday. The Romanian leu was also 0.1% weaker versus
the euro at 4.9147 ahead of a central bank meeting, where
policymakers are expected to hold rates at 1.25%.
In July, Governor Mugur Isarescu said Romania"s central bank
did not plan to hike its benchmark interest rate at its August
meeting but was assessing a timeline for a return to policy
normalisation.
"Today"s meeting is more of a non-event, but it remains to
be seen what signals come after," said a trader with a foreign
bank in Bucharest. "If they differ from market expectations,
they might have an impact on the currency."
Shares of Hungarian oil and gas group MOL jumped 1.6% on
Friday, as the stock outperformed the wider Budapest market
after it posted better than expected Q2 earnings.
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