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UPDATE 2-CEE MARKETS-Forint rebounds as cenbank announces hike of one-week deposit rate

·3 min read

(Updates with cenbank comments, forint reaction) By Anita Komuves BUDAPEST, June 22 (Reuters) - The Hungarian forint jumped and bond yields retreated on Tuesday after the central bank raised its base rate and said it will hike the one-week deposit rate as well, clearing up uncertainty around its policy. The National Bank of Hungary raised its base rate by 30 basis points to 0.9%, slightly exceeding forecasts, becoming the first in the European Union to tighten policy as the economy recovers from the pandemic. The forint jumped to 351.85 per euro, gaining 0.61% on the day, and government bond yields retreated after the central bank said it would bring its crisis instrument, the one-week deposit rate, in line with the base rate. Earlier, the forint slid as far as 356 against the common currency and government bond yields rose as uncertainty about the one-week deposit rate concerned investors when the decision about the base rate was announced. "The rise in the one-week rate helped, and the bank saying that it could hike rates monthly also boosted the forint," an FX trader in Budapest said. Government bond yields were unmoved on the short end of the curve and 4-5 points lower on the long end on the day, a fixed-income trader said. "The one-week rate will be 0.9%, as expected, and the market is now pricing in a transparent, credible monetary policy," he said. The Czech National Bank is also expected to raise its base rate at its Wednesday meeting. A Reuters poll forecasts a 25 basis points hike. The Czech crown edged down 0.07% to trade at 25.535 per euro. Elsewhere, the Polish zloty firmed 0.17% to 4.5205 per euro, while the Romanian leu edged down 0.07% to 4.9260. Stocks in the region were mixed, with Budapest down 0.19% while Warsaw firmed 0.21%. Prague was 0.24% lower, while Bucharest eased 0.51%. CEE SNAPSHO AT MARKETS T 1621 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech EURHUF= Hungary 0 EURPLN= Polish EURRON= Romania EURHRK= Croatia EURRSD= Serbian 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1163.16 1165.950 -0.24% +13.24 0 % .BUX Budapes 48288.1 48379.62 -0.19% +14.68 t 2 % .WIG20 Warsaw 2224.19 2219.45 +0.21% +12.11 % .BETI Buchare 11548.5 11608.18 -0.51% +17.77 st 3 % .SBITOP Ljublja <.SBITOP 1122.95 1138.83 -1.39% +24.65 na > % .CRBEX Zagreb 1981.15 1981.15 +0.00% +13.91 % .BELEX1 Belgrad <.BELEX1 776.74 775.57 +0.15% +3.76% 5 e 5> .SOFIX Sofia 550.21 557.84 -1.37% +22.94 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c CZ2YT=R s CZ5YT=R s CZ10YT= s Poland PL2YT=R s PL5YT=R s PL10YT= s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.83 1.10 1.41 0.44 Rep Hungary 1.45 1.82 1.95 0.95 Poland 0.35 0.58 0.79 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Anita Komuves; editing by Uttaresh.V and Krishna Chandra Eluri)