CEE MARKETS-Zloty underperforms on raised inflation projections and dovish cenbank messages
By Anita Komuves BUDAPEST, July 12 (Reuters) - The Polish zloty slipped on Monday, underperforming its peers, as dovish messages from the central bank governor coupled with raised inflation projections pressured the currency. The zloty weakened 0.26% to 4.5570 per euro after Adam Glapinski stuck to his dovish tone in a press conference on Friday, insisting that the central bank would not rush into any decisions about tightening policy. On Monday the Polish central bank published its latest inflation report, showing a higher central path for inflation and GDP in 2021 than previously forecast. Unlike its Czech and Hungarian counterparts, the National Bank of Poland (NBP) kept rates unchanged at record lows last week, arguing that the increase in inflation is temporary. Some market participants could disagree with the NPB about the temporary nature of inflation and "will focus on Poland's deeply negative real interest rate, and get more bearish on the exchange rate," Commerzbank wrote. "This is likely to be one source of pressure on the zloty during the coming year." The Czech crown and the Hungarian forint were steady after touching near 2-month lows last week when worries over new coronavirus variants and global inflation waves hit risk appetite. The currencies regained some losses on Friday. The forint edged up 0.03% to 355.50 per euro. Global market uncertainties could keep pressuring the forint, CIB Bank wrote. In order for the forint to be significantly stronger, the central bank needs to become "much more aggressive, as delivering the rate hike already priced in by markets apparently cannot strengthen the currency substantially," they added. The Hungarian central bank raised its benchmark rate by 30 basis points at its June meeting and said that it has launched a cycle of interest rate hikes to fight inflation. Stocks in the region were mixed, with Budapest down 0.47%, Prague down 0.07%, while Warsaw edged up 0.05%. CEE SNAPSHO AT MARKETS T 1049 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech <EURCZK= 25.7790 25.7550 -0.09% +1.75% crown > EURHUF= Hungary <EURHUF= 355.500 355.6000 +0.03% +2.03% forint > 0 EURPLN= Polish <EURPLN= 4.5570 4.5450 -0.26% +0.05% zloty > EURRON= Romania <EURRON= 4.9270 4.9277 +0.01% -1.26% n leu > EURHRK= Croatia <EURHRK= 7.4930 7.4923 -0.01% +0.73% n kuna > EURRSD= Serbian <EURRSD= 117.520 117.5850 +0.06% +0.04% dinar > 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1155.28 1156.040 -0.07% +12.48 0 % .BUX Budapes 47929.8 48157.57 -0.47% +13.83 t 1 % .WIG20 Warsaw 2252.83 2251.78 +0.05% +13.55 % .BETI Buchare 11870.1 11870.90 -0.01% +21.05 st 3 % .SBITOP Ljublja <.SBITOP 1132.71 1134.65 -0.17% +25.74 na > % .CRBEX Zagreb 1951.60 1954.03 -0.12% +12.21 % .BELEX1 Belgrad <.BELEX1 773.84 773.58 +0.03% +3.37% 5 e 5> .SOFIX Sofia 562.28 561.27 +0.18% +25.64 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c CZ2YT=R <CZ2YT=R 0.4580 0.0000 +113bp +0bps R 2-year R> s CZ5YT=R <CZ5YT=R 1.6420 -0.0300 +225bp -2bps R 5-year R> s CZ10YT= <CZ10YT= 1.7910 0.0020 +209bp +1bps RR 10-year RR> s Poland PL2YT=R <PL2YT=R 0.4460 0.0060 +112bp +1bps R 2-year R> s PL5YT=R <PL5YT=R 1.2690 -0.0370 +187bp -3bps R 5-year R> s PL10YT= <PL10YT= 1.6920 0.0070 +200bp +2bps RR 10-year RR> s FORWARD 3x6 6x9 9x12 3M interba nk Czech 1.06 1.36 1.61 0.66 Rep <PRIBOR= > Hungary 1.68 2.04 2.21 1.06 Poland 0.32 0.43 0.64 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Alan Charlish in Warsaw and Jason Hovet in Prague; Editing by Shailesh Kuber)
