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CEE MARKETS-Hungarian forint hits 3-month high, higher inflation fuels rate expectations

·3 min read

BUCHAREST, May 14 (Reuters) - The Hungarian forint firmed to a three-month high against the euro on Friday, boosted by high short-term interest rates, while other central and eastern European currencies and stocks were mixed. By 0938 GMT, the forint was up 0.2% on the day, trading at 356.10 per euro. Long-term government bond yields were stable. "The forint is firming because the high CPI data fuels rate hike expectations," a Budapest-based trader said. "Also, short-term rates in Hungary are the highest in the region and that gives the forint an advantage among its peers." Hungarian headline inflation jumped to 5.1% year-on-year in April from 3.7% in March, exceeding market forecasts, data showed earlier this week. Bond yields in both Hungary and Poland rose as higher-than-expected inflation data reinforced expectations of policy tightening. However, while most CEE countries reported higher than expected inflation for April, most rate setters in the region look set to weather the spike and let their economies rebound from the COVID-19 shutdown before tightening policy. The Polish zloty was down 0.2% against the euro at 0938 GMT. The Polish economy shrank slightly less than expected in the first quarter of 2021, data showed on Friday, while inflation was 4.3% year-on-year, in line with a flash estimate and above the upper limit of the central bank's target range. "Strong GDP data will, however, further escalate inflation concerns," Commerzbank said in a research note. "Inflation data have recently surprised to the upside and the central bank anticipates this to continue for some more time. Still, no proactive change in policy stance from NBP is likely." Elsewhere in the region, the Czech crown was down 0.1% on the day. The Romanian leu was flat despite the central bank sharply lifting its end-2021 inflation forecast to 4.1%, above target. Stocks were mixed, with Prague's and Budapest's up 0.1% and 0.2%, respectively, while Warsaw's and Bucharest's were down 0.7% and 0.2%. South African conglomerate Steinhoff said on Friday it had set the price of shares in discount retailer Pepco at 40 zlotys (8.8 euros) in its Warsaw listing, giving the company a market capitalisation of 23 billion zlotys (5 billion euros). CEE SNAPSHO AT MARKETS T 1159 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 Czech Hungary 0 0 Polish Romanian Croatian Serbian 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 Prague 1117.29 1105.41 +1.07% +8.78% 00 Budapest 45091.5 44974.0 +0.26% +7.09% 5 8 Warsaw 2074.11 2089.32 -0.73% +4.54% Buchares 11599.6 11616.8 -0.15% +18.30 t 6 8 % Ljubljan <.SBITOP 1069.17 1071.25 -0.19% +18.68 a > % Zagreb 1944.64 1937.73 +0.36% +11.81 % Belgrade <.BELEX1 760.33 758.45 +0.25% +1.57% 5> Sofia 519.77 519.91 -0.03% +16.14 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year s 5-year s s Poland 2-year s 5-year s s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.64 0.96 1.35 0.36 Rep Hungary 1.05 1.26 1.46 0.79 Poland 0.36 0.46 0.61 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Luiza Ilie in Bucharest, Anita Komuves in Budapest and Alan Charlish in Warsaw; Editing by Kevin Liffey)