CEE MARKETS-Forint weakens after 30-basis point rate hike disappoints some market players

  • 11/16/2021
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(Updates with cenbank decision, forint reaction) By Anita Komuves BUDAPEST, Nov 16 (Reuters) - The Hungarian forint fell on Tuesday after the central bank raised its base rate by 30 basis points - in line with forecasts but disappointing for some investors who expected a faster pace of tightening after a jump in inflation. The forint weakened about 0.7% after the rate decision. It was down 0.23% on the day and trading at 366.60 per euro by 1334 GMT, less than a percent off its April 2020 all-time low. Despite the forint"s plunge, hawkish messages from the central bank in its statement and at its press conference could help the currency, two FX traders in Budapest said. "The forint will continue weakening towards its all-time low if the market does not hear strong messages," one trader said. The bank was to publish its statement and hold a press conference at 1400 GMT. Uncertainty over by how much the bank would be willing to raise rates had worried markets over the past weeks, putting pressure on the forint. The NBH slowed the pace of rate rises to 15 bps in September from 30 bps previously, and followed that with another 15 bps hike in October. The forint has eased more than 3% versus the euro since the bank"s September decision to slow down rate hikes. Long-term government bond yields were not immediately moved by the rate hike, a fixed-income trader said. The forint has also been pressured by larger-than-expected rate hikes from the Polish and the Czech central banks earlier this month to counter rising inflation. However, analysts said that faltering growth and rising COVID-19 cases could make central banks in the region more cautious in coming months as data showed that CEE economies grew below expectations in the third quarter. Elsewhere, the Czech crown and the Romanian leu were stable. The Polish zloty slid 0.15% to 4.6510 per euro. Rate setter Eugeniusz Gatnar said two more rate hikes of 50 basis points each in December and January were needed. Most stocks in the region gained, with Bucharest up 0.35%. Prague 0.17% higher and Warsaw"s equities edging up 0.07%. Budapest was 0.02% lower. CEE SNAPSHO AT MARKETS T 1434 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 Latest Previou Daily Change s close change in 2021 .PX Prague 1382.16 1379.79 +0.17% +34.5 00 6% .BUX Budapest 51776.9 51789.8 -0.02% +22.9 0 0 6% .WIG20 Warsaw <.WIG20 2336.79 2335.04 +0.07% +17.7 > 8% .BETI Buchares 12877.9 12832.8 +0.35% +31.3 t 3 9 3% .SBITO Ljubljan <.SBITO 1225.65 1225.46 +0.02% +36.0 P a P> 5% .CRBEX Zagreb <.CRBEX 1994.93 2000.19 -0.26% +14.7 > 0% .BELEX Belgrade <.BELEX 813.65 815.81 -0.26% +8.69 15 15> % .SOFIX Sofia <.SOFIX 603.68 606.08 -0.40% +34.8 > 9% 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 FORWARD 3x6 6x9 9x12 3M interb ank Czech Hungary Poland Note: are for ask FRA prices quotes ******************************************** ****************** (Reporting by Anita Komuves in Budapest; Editing by Amy Caren Daniel and Mark Heinrich)

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