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CEE MARKETS-Forint outperforms peers as PM's aide expect fast economic recovery

Anita Komuves
·4 min read

By Anita Komuves BUDAPEST, Jan 20 (Reuters) - Central European currencies edged up on Wednesday, with the Hungarian forint outperforming its peers and extending gains from the previous session when the prime minister's aide said the country's economy could recover quickly. The forint gained 0.28% and was trading at 357.00, breaking out of the tight 359-362 range it has traded for more than a week. "The comments by Marton Nagy yesterday made markets a bit more optimistic, and the slight weakening of the dollar also helps," a Budapest-based FX trader said. Hungary's economy could recover rapidly once restrictions to contain the COVID-19 pandemic end and the economy could expand by 5% to 6% this year, Marton Nagy, Viktor Orban's senior economic aide said. "The interventions to weaken the zloty in Poland and the surprise rate cut by the Romanian central bank could be helping the forint strengthen more than we expected," another trader in Budapest said. The central bank in Romania cut its benchmark interest rate by a quarter-point to 1.25% on Friday. Hungary's central bank held main interest rates unchanged last month and has pledged a cautious monetary policy. The leu edged down 0.02%, trading at 4.8750 per euro. The zloty firmed 0.18% and was trading at 4.5235 versus the common currency as the central bank reiterated its dovish stance. Uncertainty over the COVID-19 pandemic raises a slight risk of further rates cuts in Poland and they are more likely to stay stable as the economy recovers, central banker Cezary Kochalski said. The Czech economy is headed for a double-dip recession due to the pandemic but the second dip is likely to be shallower than the first, central bank Governor Jiri Rusnok said on Tuesday. He reiterated that the bank did not feel a need to ease monetary policy further. The Czech crown was up 0.05% and trading at 26.133 per euro. Stock markets in the region were mixed, with Budapest's equities weakening 0.53% while Warsaw was up 0.18%. Prague firmed 0.29%. CEE SNAPSHO AT MARKETS T 1048 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech <EURCZK= 26.1330 26.1460 +0.05 +0.37% crown > % EURHUF= Hungary <EURHUF= 357.000 358.0000 +0.28 +1.60% forint > 0 % EURPLN= Polish <EURPLN= 4.5235 4.5315 +0.18 +0.79% zloty > % EURRON= Romanian <EURRON= 4.8750 4.8740 -0.02% -0.21% leu > EURHRK= Croatian <EURHRK= 7.5630 7.5645 +0.02 -0.21% kuna > % EURRSD= Serbian <EURRSD= 117.470 117.5700 +0.09 +0.09% dinar > 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1076.06 1072.990 +0.29 +4.76% 0 % .BUX Budapest 44371.4 44610.00 -0.53% +5.38% 6 .WIG20 Warsaw 1983.77 1980.12 +0.18 -0.01% % .BETI Buchares 10210.1 10242.51 -0.32% +4.13% t 4 .SBITOP Ljubljan <.SBITOP 945.63 947.92 -0.24% +4.97% a > .CRBEX Zagreb 1823.71 1817.97 +0.32 +4.85% % .BELEX1 Belgrade <.BELEX1 731.36 732.53 -0.16% -2.30% 5 5> .SOFIX Sofia 490.56 476.94 +2.86 +9.61% % Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT=R 2-year <CZ2YT=R 0.2370 -0.0240 +094b -2bps R R> ps CZ5YT=R 5-year <CZ5YT=R 0.7630 -0.0370 +148b -4bps R R> ps CZ10YT= <CZ10YT= 1.2570 -0.0100 +178b -1bps RR 10-year RR> ps Poland PL2YT=R 2-year <PL2YT=R 0.0190 -0.0720 +073b -7bps R R> ps PL5YT=R 5-year <PL5YT=R 0.3510 -0.0530 +107b -5bps R R> ps PL10YT= <PL10YT= 1.1690 -0.0140 +170b -1bps RR 10-year RR> ps FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.39 0.44 0.53 0.36 Rep <PRIBOR= > Hungary 0.75 0.76 0.80 0.75 Poland 0.15 0.15 0.16 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Jason Hovet in Prague; editing by Barbara Lewis)