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CEE MARKETS-FX weaker with markets waiting on Polish rate hike, forint unmoved by CPI jump

·3 min read

PRAGUE, Dec 8 (Reuters) - Central European currencies eased on Wednesday, with Hungary's forint unmoved by a rise in inflation to a 14-year high and Poland's zloty awaiting an expected interest rate hike later in the day. Central banks around the region have hiked interest rates in recent months to battle surging price growth fuelled by both external and domestic factors. Markets expect the Polish central bank to lift its base rate by at least 50 basis points, to 1.75%, on Wednesday, keeping the zloty clinging to a five-week high. The zloty traded down 0.2% on the day at 4.593 to the euro at 0935 GMT. "A more aggressive interest rate hike - 75 bps - would support the current efforts of the zloty to strengthen against the euro and would allow the EUR/PLN rate to break the 4.58 barrier," Bank Millennium said. "However, the latest press reports about the likely non-acceptance of the national recovery plan by Brussels this year will remain a counterweight." With tighter monetary policy in the region, currencies are set to gain in the next year, according to Reuters polls, although a stronger U.S. dollar and political risks like Warsaw and Budapest's disputes with the European Union over rule of law and other issues can provide a drag. In Hungary, inflation data showed the headline rate spiking almost a full percentage point to 7.4% in November. "In light of [high inflation] the rate hike cycle of the National Bank of Hungary could continue in the next weeks," Peter Virovacz, senior economist at ING, said. The effect on the forint, though, was limited as the data was priced in, one trader said. The forint slipped 0.2% to 367.8 per euro. "Investors are waiting for a series of big stuff coming up in the next few days before deciding on a direction: Waiting for the decision of the Polish central bank, inflation numbers from the Czech Republic and the meetings of the Fed and the ECB," the trader said. Czech inflation data was due Friday and was also expected to show a jump after rising to 5.8% in October, the highest rate since 2008. The crown tread water, down 0.1% at 25.47 to the euro in morning trade. CEE SNAPSHO AT MARKETS T 1035 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 STOCKS Latest Previou Daily Change s close change in 2021 .PX Prague 1394.79 1387.24 +0.54% +35.79 00 % .BUX Budapest 51297.0 51268.6 +0.06% +21.82 4 5 % .WIG20 Warsaw <.WIG20 2219.83 2231.12 -0.51% +11.89 > % .BETI Buchares 12699.9 12519.2 +1.44% +29.52 t 7 7 % .SBITO Ljubljan <.SBITO 1227.97 1230.12 -0.17% +36.31 P a P> % .CRBEX Zagreb <.CRBEX 1999.46 2003.15 -0.18% +14.96 > % .BELEX Belgrade <.BELEX 828.90 832.66 -0.45% +10.73 15 15> % .SOFIX Sofia <.SOFIX 621.01 627.19 -0.99% +38.76 > % BONDS 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 FRA 3x6 6x9 9x12 3M interba nk Czech Hungary Poland Note: FRA quotes are for ask prices ******************************************** ****************** (Reporting by Jason Hovet in Prague, Anita Komuves in Budapest, Pawel Florkiewicz and Alan Charlish in Warsaw, Editing by Angus MacSwan)