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CEE MARKETS-Forint sinks to two-month-low on rising U.S. Treasury yields

·3 min read

BUDAPEST, Sept 28 (Reuters) - Hungary's forint hit a two-month-low against the euro on Tuesday, pressured by rising U.S. Treasury yields, high inflation and a row with the European Union, which has led to a freeze in pandemic recovery funding. At 0833 GMT, the forint traded at 359.03 per euro, its weakest level since the end of July and within sight of the key 360 level. The currency, which fell nearly 2% over the past week, has surrendered most of its gains made this year. The Hungarian and Czech central banks both started raising rates in June, boosting the forint and the crown by some 3% against the euro ahead of last week's the National Bank of Hungary (NBH) rate meeting, when the bank raised rates by a smaller-than-expected 15 basis points to 1.65%. "We are headed north, we will see whether we will reach the 360 mark today," a Budapest-based currency dealer said. "U.S. yields are rising, the 10-year is nearly at 1.55%, and the region as a whole is weakening." The trader said several factors, including the Hungarian inflation outlook and the funding row with the EU, pointed towards more forint weakening in the near term. Despite raising its inflation forecasts for this year and the next, the NBH said it would hike rates further in 15-basis-point steps, slowing the pace of tightening after three successive 30-basis-point hikes. Most central European currencies were in the red in morning trade but for the Serbian dinar, which gained 0.1%. Hungarian brokerage Erste Investment said the forint broke through its 200-day moving average on Monday, failing to benefit from a credit rating upgrade by Moody's last week. Erste said the Hungarian central bank's swap tenders providing euro liquidity this week could stem bigger falls in the exchange rate. CEE SNAPSHO AT MARKETS T 1033 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 .PX Prague 1322.40 1322.40 +0.00% +28.75 00 % .BUX Budapest 51564.2 51365.9 +0.39% +22.46 8 9 % .WIG20 Warsaw <.WIG20 2288.54 2292.47 -0.17% +15.35 > % .BETI Buchares 12598.0 12510.2 +0.70% +28.48 t 2 6 % .SBITO Ljubljan <.SBITO 1170.83 1167.76 +0.26% +29.97 P a P> % .CRBEX Zagreb <.CRBEX 1993.21 1979.15 +0.71% +14.60 > % .BELEX Belgrade <.BELEX 800.86 800.86 +0.00% +6.98% 15 15> .SOFIX Sofia <.SOFIX 576.87 571.80 +0.89% +28.90 > % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year s CZ5YT= 5-year s CZ10YT s Poland PL2YT= 2-year s PL5YT= 5-year s PL10YT s FORWARD 3x6 6x9 9x12 3M interba nk Czech Hungary Poland Note: are for ask FRA prices quotes ******************************************** ****************** (Reporting by Gergely Szakacs; Editing by Rashmi Aich)