FX gains as higher-than-expected CPI data fuels rate hike hopes

  • 1/14/2022
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BUDAPEST, Jan 14 (Reuters) - Central European currencies firmed on Friday, as higher-than-expected inflation data in Hungary and Romania indicated that rate hikes could continue in the region. Hungarian headline inflation was unchanged at 14-year highs of 7.4% year-on-year in December, exceeding analyst forecasts. The central bank"s tax-adjusted core inflation gauge accelerated to 6.4% in December from 5.3% in November. "In light of today"s data we expect the rate hike cycle of the National Bank of Hungary to continue in the next months," Peter Virovacz, senior economist at ING wrote. The forint was stable, trading at 354.86 per euro. It has firmed more than 4% in the past two weeks, lifted by higher central bank rates. The bank"s next rate-setting meeting is scheduled for Jan. 25. "The firming we saw was really fast, so based on technical indicators we could see a correction soon," an FX trader in Budapest said. The Romanian leu was up 0.02% and trading at 4.9430 per euro as consumer price inflation exceeded expectations and rose to 8.19%, its highest in a decade. The typically steady leu has gained 0.11% this month and is around levels it last traded at in September. Romania"s central bank raised its benchmark interest rate by 25 basis points to 2.00% earlier this week. read more Elsewhere, the Polish zloty firmed 0.09% to 4.5370 versus the common currency. The Czech crown gained 0.46% and was trading at 24.429 per euro after it fell in a correction in the previous session. Most stocks in the region slid, with Budapest (.BUX) leading losses as it shed 1.72%. Prague (.PX) eased 0.31% while Warsaw (.WIG20) was 0.64% lower. Bucharest (.BETI) bucked the trend and gained 1.56%. CEE MARKETS SNAPSHOT AT 1122 CET CURRENCIES Latest Previous Daily Change bid close change in 2022 EURCZK= Czech crown 24.4290 24.5420 +0.46% +1.81% EURHUF= Hungary forint 354.8600 354.8500 -0.00% +4.09% EURPLN= Polish zloty 4.5370 4.5413 +0.09% +1.19% EURRON= Romanian leu 4.9430 4.9442 +0.02% +0.11% EURHRK= Croatian kuna 7.5190 7.5195 +0.01% -0.02% EURRSD= Serbian dinar 117.5500 117.6000 +0.04% +0.03% Note: daily change calculated from 1800 CET Latest Previous Daily Change close change in 2022 .PX Prague (.PX) 1444.30 1448.7500 -0.31% .BUX Budapest (.BUX) 52810.67 53736.16 -1.72% +4.12% .WIG20 Warsaw (.WIG20) 2392.32 2407.62 -0.64% +5.53% .BETI Bucharest (.BETI) 13665.65 13455.47 +1.56% +4.63% .SBITOP Ljubljana (.SBITOP) 1310.59 1307.52 +0.23% +4.39% .CRBEX Zagreb (.CRBEX) 2158.93 2158.15 +0.04% +3.83% .BELEX15 Belgrade (.BELEX15) 830.88 830.41 +0.06% +1.23% .SOFIX Sofia (.SOFIX) 649.09 648.19 +0.14% +2.11% Yield Yield Spread Daily (bid) change vs Bund change in Czech Republic spread CZ2YT=RR 2-year 3.9470 -0.0320 +454bps -4bps CZ5YT=RR 5-year 3.5230 -0.0170 +390bps -4bps CZ10YT=RR 10-year 3.1860 0.0080 +326bps -1bps Poland PL2YT=RR 2-year 3.3000 -0.0120 +390bps -2bps PL5YT=RR 5-year 3.9140 0.0330 +430bps +1bps PL10YT=RR 10-year 4.0320 0.0280 +410bps +1bps FORWARD 3x6 6x9 9x12 3M interbank Czech Rep 4.98 4.96 4.69 4.20 Hungary 4.74 4.93 4.94 4.19 Poland 3.89 4.12 4.12 2.75 Note: FRA quotes are for ask prices **************************************************************

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