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CEE MARKETS-Forint hits lowest level in 2021 as region pressured by pandemic

Anita Komuves
·3 min read

By Anita Komuves BUDAPEST, March 2 (Reuters) - Central European currencies on Tuesday recouped early losses that saw Hungary's forint hit its weakest level so far this year, but they remained vulnerable due to a stronger dollar, higher U.S. treasury yields and coronavirus concerns. Parts of the region, especially the Czech Republic, are experiencing increased coronavirus infections and are tightening lockdown measures to contain the spread of the disease. The Polish zloty was 0.06% stronger at 4.5330 versus the euro, while the Czech crown edged up 0.09% and was trading at 26.137 per euro. Both had slipped in early trade. A surge in coronavirus infections in the Czech Republic and its tightening of restrictions will keep the crown under pressure until case numbers drop and rate hike expectations return, Commerzbank wrote. The Hungarian forint firmed 0.15% after falling in early trading to its weakest level in 2021. "Most CEE currencies have weakened as U.S. yields rose and virus cases jumped, and the forint reacted more strongly than others (to the developments)," a Budapest-based FX trader said. "The strengthening of the dollar is not helping, either." The National Bank of Hungary on Tuesday offered to buy government bonds from banks, for the first time including a newly issued 5-year government bond in the offer. Tender results will be published at 1200 GMT. Hungarian government bond yields rose along with U.S. Treasury yields recently but started to retreat at the end of last week as bond markets stabilised in Europe and the United States. The yield on Hungary's 10-year government bond was 2.57% on Monday, 15 basis points below last week's highs but 50 points higher than at the start of this year. "Yields ticked down 3-5 points this morning, continuing their retreat in low liquidity and mostly due to technical reasons as the pace of last week's rise in yields was impossible to keep up," a fixed-income trader said in Budapest. "Markets around the world are waiting for central banks to give them direction." CEE SNAPSHO AT MARKETS T 1106 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech % EURHUF= Hungary 0 % EURPLN= Polish % EURRON= Romanian EURHRK= Croatian EURRSD= Serbian 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1070.20 1066.260 +0.37 +4.19% 0 % .BUX Budapest 44818.8 44710.25 +0.24 +6.44% 9 % .WIG20 Warsaw 1965.73 1949.57 +0.83 -0.92% % .BETI Buchares 10242.9 10230.37 +0.12 +4.46% t 5 % .SBITOP Ljubljan <.SBITOP 977.21 978.19 -0.10% +8.48% a > .CRBEX Zagreb 1836.16 1829.88 +0.34 +5.57% % .BELEX1 Belgrade <.BELEX1 745.87 744.97 +0.12 -0.37% 5 5> % .SOFIX Sofia 500.31 502.34 -0.40% +11.79 % Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT=R 2-year ps CZ5YT=R 5-year ps CZ10YT= ps Poland PL2YT=R 2-year ps PL5YT=R 5-year ps PL10YT= ps FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.43 0.60 0.83 0.36 Rep Hungary 0.90 1.06 1.21 0.77 Poland 0.25 0.27 0.35 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Pawel Florkiewicz in Warsaw and Robert Muller in Prague Editing by Gareth Jones)