CEE MARKETS-Forint underperforms ahead of inflation data, rate hike hopes linger
By Anita Komuves BUDAPEST, July 6 (Reuters) - The Hungarian forint weakened on Tuesday, underperforming its peers as markets were eyeing key inflation data to be published this week while a hawkish message from the central bank deputy governor failed to support the currency. The forint slid 0.42% to 353.20 per euro, breaking out of the tight range of 351-352 where it has been stuck since the central bank raised its benchmark base rate on June 22. Liquidity was tight, FX traders in Budapest said. Investors were looking ahead to key June inflation data to be published on Thursday that could give a clue to markets about the size of the next rate hike of the central bank, expected at the July rate meeting. "Some investors could try to weaken the forint ahead of the CPI data, counting on higher-than-expected inflation that will fuel rate hike expectations and boost the forint," one trader said. "A weaker forint is a better entry point for them." The currency firmed on Monday shortly after central bank deputy governor Barnabas Virag said that the bank would act decisively and in the fastest way possible to counter inflation risks, but then gave up its gains. The remarks "ought to have counted as a modest hawkish surprise" but the forint failed to rally, Commerzbank writes. "The market's reaction suggests a certain scepticism about how far the NBH will hike rates overall." The Romanian leu was stable ahead of a central bank meeting on Wednesday where all analysts polled by Reuters expect the benchmark rate to remain unchanged at 1.25%. Five of eight analysts expect a quarter-point hike by the end of March. The Polish zloty was also little moved as markets were looking ahead to the central bank's rate decision on Thursday. Rate hikes in Hungary and the Czech Republic in June fuelled anticipation of sooner-than-expected tightening in Poland as well, which buoyed the zloty in the past two weeks. Stocks in the region were mixed, with Bucharest up 0.55% while Warsaw gained 0.28%. Budapest slid 0.1%. Markets in the Czech Republic were closed for a holiday. CEE SNAPSHOT AT MARKETS 1108 CET CURRENCI ES Latest Previous Daily Change bid close change in 2021 EURCZK Czech 25.6000 25.5650 -0.14% +2.46% = crown EURHUF Hungary 353.2500 351.7500 -0.42% +2.68% = forint EURPLN Polish 4.5023 4.5030 +0.02% +1.26% = zloty EURRON Romania 4.9262 4.9270 +0.02% -1.24% = n leu EURHRK Croatia 7.4845 7.4883 +0.05% +0.84% = n kuna EURRSD Serbian 117.4900 117.5850 +0.08% +0.07% = dinar Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1152.13 1152.130 +0.00% +12.17% 0 .BUX Budapes 47375.64 47423.61 -0.10% +12.51% t .WIG20 Warsaw 2265.13 2258.82 +0.28% +14.17% .BETI Buchare 11962.25 11895.89 +0.56% +21.99% st .SBITO Ljublja 1130.89 1130.22 +0.06% +25.54% P na .CRBEX Zagreb 1971.38 1967.75 +0.18% +13.34% .BELEX Belgrad <.BELEX15 772.80 771.62 +0.15% +3.23% 15 e > .SOFIX Sofia 544.73 552.02 -1.32% +21.72% Yield Yield Spread Daily (bid) change vs change Bund in Czech Republic spread CZ2YT= 2-year <CZ2YT=RR 0.5150 0.0240 +118bp +3bps RR > s CZ5YT= 5-year <CZ5YT=RR 1.6830 -0.0580 +228bp -5bps RR > s CZ10YT 10-year <CZ10YT=R 1.8410 -0.0030 +206bp +1bps =RR R> s Poland PL2YT= 2-year <PL2YT=RR 0.4290 0.0620 +110bp +7bps RR > s PL5YT= 5-year <PL5YT=RR 1.3200 -0.0500 +191bp -4bps RR > s PL10YT 10-year <PL10YT=R 1.7100 0.0600 +193bp +8bps =RR R> s FORWARD 3x6 6x9 9x12 3M interba nk Czech < 1.03 1.33 1.63 0.66 Rep PRIBOR=> Hungary < 1.60 2.00 2.16 1.05 BUBOR=> Poland < 0.31 0.56 0.78 0.21 WIBOR=> Note: are for ask prices FRA quotes ********************************************** **************** (Reporting by Anita Komuves, editing by Ed Osmond)
