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CEE MARKETS-Forint stable ahead of next week's key rate meeting

·3 min read

By Anita Komuves BUDAPEST, June 18 (Reuters) - The Hungarian forint was stable on Friday after suffering heavy losses this week ahead of a key central bank meeting next Tuesday when any lower-than-expected rate hike could further pressure the currency. A Reuters poll on Wednesday forecast a 25 basis point rise in the Hungarian base rate at Tuesday's meeting, which would make the country the first in the European Union to tighten monetary policy after the coronavirus pandemic. The forint was trading at 355 per euro at the end of a week when it fell nearly 2%, underperforming its regional peers. Most central European currencies fell in the previous two sessions as a hawkish message from the U.S. Federal Reserve on Wednesday dampened risk appetite. The forint was also hit this week by a central banker's comments on Monday that the bank could raise rates quarterly, which would be slower than current market expectations, a trader in Budapest said. "If the rate hike next week is lower than what markets are pricing in, that could further weaken the forint," he said. The Czech central bank will hold its policy meeting next Wednesday. Expectations of policy tightening boosted the forint and the Czech crown to lead gains in central Europe in the first half of 2021, although they both gave up some of those gains after the Fed said it could tighten policy sooner than expected. The crown edged up 0.06% to 25.519 versus the common currency on Friday. The Polish zloty was little moved. "The zloty came out relatively unscathed from the turmoil in recent days" as it is supported by a strong economy, ING wrote. "However, the potential for strengthening will be limited by the policy of the NBP (National Bank of Poland), which will most likely decide to raise rates at the earliest in November." Stocks in the region were mixed, with Prague and Budapest both down 0.49%. Warsaw gained 0.28% and Bucharest was up 0.33%. CEE SNAPSHOT AT MARKETS 1125 CET CURRENCI ES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech % % EURHUF= Hungary % % EURPLN= Polish % % EURRON= Romanian EURHRK= Croatian % EURRSD= Serbian % % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1167.18 1173.950 -0.58% +13.6 0 3% .BUX Budapest 48482.49 48795.68 -0.64% +15.1 4% .WIG20 Warsaw 2212.77 2211.58 +0.05 +11.5 % 3% .BETI Buchares 11687.90 11657.26 +0.26 +19.2 t % 0% .SBITOP Ljubljan <.SBITOP 1146.99 1145.47 +0.13 +27.3 a > % 2% .CRBEX Zagreb 1995.16 1996.43 -0.06% +14.7 1% .BELEX1 Belgrade <.BELEX1 778.79 778.79 +0.00 +4.03 5 5> % % .SOFIX Sofia 550.33 550.74 -0.07% +22.9 7% 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 interb ank Czech 0.78 1.05 1.36 0.44 Rep Hungary 1.42 1.69 1.86 0.93 Poland 0.33 0.50 0.70 0.21 Note: are for ask prices FRA quotes ********************************************** **************** (Additional reporting by Alan Charlish in Warsaw and Jason Hovet in Prague Editing by Gareth Jones)