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CEE MARKETS-Currencies ease after week of gains fuelled by rate hike hopes

·3 min read

By Anita Komuves BUDAPEST, Oct 15 (Reuters) - Central European currencies edged lower in a mild correction on Friday, giving up some of their gains posted over the past week on rate hike expectations by the region's central banks as inflation accelerated across the region. The Hungarian forint eased 0.19% to 359.65 per euro. Attention was turning towards the Hungarian central bank's rate-setting meeting next Tuesday where another hike is expected, after four consecutive increases since June. According to a Reuters poll of analysts, the National Bank of Hungary (NBH) is expected to raise its base rate by 15 basis points to 1.8%. There is also an odd chance that the bank could deliver a bigger hike on Tuesday, some analysts said. "We see a non-negligible risk of the central bank delivering a one-off 30bp hike at the upcoming October or following November meeting," Morgan Stanley analysts said in a note. The forint has given up nearly all its gains since the NBH started tightening in June as it slowed the pace of rate rises last month despite raising its inflation forecasts. Since then, the Czech central bank has shocked markets with a 75 bp rate increase, while the Polish central bank unexpectedly raised its benchmark rate by 40 bps. "Another 15-basis-point hike will not significantly help the forint, though it could firm a little," an FX trader in Budapest said. The Czech crown eased 0.09% to 25.400 to the euro, though analysts expect it to remain supported by further rate hikes. The currency has gained 3.26% so far this year, outperforming its peers in the CEE region. The Polish zloty slipped 0.12% to 4.5733 versus the euro. The currency was still trading on the stronger side of the important level of 4.6 as it has firmed 0.8% since the beginning of the week. "The market is still waiting for further interest rate hikes, which, in its opinion, should take place already in November," Bank Millennium wrote in a note. Stock markets in the region were mixed, with Budapest down 1.17% and Warsaw easing 0.52%, while Bucharest added 0.36%. CEE SNAPSHO AT MARKETS T 1110 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 1361.18 1362.260 -0.08% +32.52 0 % .BUX Budapes 54493.4 55136.00 -1.17% +29.41 t 8 % .WIG20 Warsaw 2446.75 2459.50 -0.52% +23.33 % .BETI Buchare 12772.9 12727.40 +0.36% +30.26 st 5 % .SBITOP Ljublja <.SBITOP 1177.38 1170.93 +0.55% +30.70 na > % .CRBEX Zagreb 2052.22 2047.27 +0.24% +17.99 % .BELEX1 Belgrad <.BELEX1 797.13 790.20 +0.88% +6.48% 5 e 5> .SOFIX Sofia 573.71 572.99 +0.13% +28.19 % 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 3.10 3.31 3.39 2.03 Rep Hungary 2.47 2.80 3.04 1.86 Poland 1.52 1.90 2.30 0.68 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Jason Hovet in Prague and Pawel Florkiewicz in Warsaw; Editing by Jan Harvey)