CEE MARKETS-Crown firmer after rate hike, leu edges down ahead of c.bank meet

  • 8/6/2021
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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. CEE SNAPSHO AT MARKETS T 1059 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 1232.80 1232.67 +0.01% +20.02 00 % Budapest 50115.6 49830.2 +0.57% +19.02 4 8 % Warsaw 2265.97 2270.67 -0.21% +14.21 % Buchares 11802.2 11763.4 +0.33% +20.36 t 2 7 % Ljubljan <.SBITOP 1173.67 1172.70 +0.08% +30.28 a > % Zagreb 1956.39 1957.25 -0.04% +12.48 % Belgrade <.BELEX1 777.54 776.62 +0.12% +3.86% 5> Sofia 579.16 578.38 +0.13% +29.41 % 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 1.44 1.82 2.02 0.81 Rep Hungary 2.06 2.23 2.35 1.35 Poland 0.44 0.64 0.82 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Luiza Ilie in Bucharest, Robert Muller in Prague and Krisztina Than in Budapest; Editing by Ramakrishnan M.) Our Standards: The Thomson Reuters Trust Principles.

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