Crown touches 6-week low, FX under pressure from dollar
By Anita Komuves
BUDAPEST, June 21 (Reuters) -The Czech crown touched a fresh six-week low on Friday as markets feared the Czech central bank might maintain its rate-cutting pace next week, while a strengthening dollar and a risk-averse mood pressured currencies in central Europe.
The forint EURHUF= traded 0.24% weaker versus the euro at 397.65, hovering around three-month lows.
"The forint is just sitting on the train, it is not specific to Hungary, the strong dollar is affecting the entire region," an FX trader in Budapest said.
"This is why the (Hungarian) central bank should have sent a stronger message and ruled out any more rate cuts this year," the trader added.
Hungary's central bank made the smallest rate cut to date in its 14-month easing cycle on Tuesday, but did not rule out the scope for more rate cuts in the second half of this year.
A second trader said that market participants were also "super nervous" about the snap election in France scheduled for June 30, another geopolitical uncertainty, which leads to investors turning away from riskier currencies.
"This is why currencies in central Europe cannot calm down," she said.
The Czech crown EURCZK= traded 0.08% weaker at 24.93 per euro after touching a six-week low of 24.97.
Markets have been betting the Czech central bank will opt for a smaller 25-basis-point rate cut at a meeting next week, following three straight 50-bp moves.
But central banker comments have showed that a sharper cut was still an option next week.
Some analysts said a weaker crown might tip policymakers toward a smaller cut next week.
We "expect a move closer to 25.00, which in effect could be the end for the dovish CNB and offer one more reason to cut rates by 25bp rather than 50bp," ING wrote in a note.
The Polish zloty EURPLN= slid 0.08% to 4.333 per euro.
"After Thursday's session, we do not see any new factors on the horizon that would support further strengthening of the PLN in the short term," said PKO Bank, Poland's biggest lender.
"We assume that EUR/PLN will end the week in the zone of 4.32-4.35, with an asymmetric risk of the exchange rate approaching the upper limit of this range."
Stocks in the region were mixed, with Warsaw's blue chip index .WIG20 easing 0.3%, while Budapest .BUX added 0.14%.
CEE MARKETS | SNAPSHOT | AT 1055 CET | |||
CURRENCIES | |||||
Latest | Previous | Daily | Change | ||
trade | close | change | in 2024 | ||
Czech crown | EURCZK= | 24.9300 | 24.9100 | -0.08% | -0.92% |
Hungary forint | EURHUF= | 397.6500 | 396.7000 | -0.24% | -3.64% |
Polish zloty | EURPLN= | 4.3330 | 4.3295 | -0.08% | +0.27% |
Romanian leu | EURRON= | 4.9770 | 4.9769 | -0.00% | -0.05% |
Serbian dinar | EURRSD= | 116.9800 | 117.0400 | +0.05% | +0.23% |
Note: daily change | calculated from | 1800 CET | |||
Latest | Previous | Daily | Change | ||
close | change | in 2024 | |||
Prague | .PX | 1535.68 | 1537.9600 | -0.15% | +8.60% |
Budapest | .BUX | 70440.18 | 70327.34 | +0.16% | +16.20% |
Warsaw | .WIG20 | 2493.94 | 2497.82 | -0.16% | +6.44% |
Bucharest | .BETI | 18109.01 | 18042.59 | +0.37% | +17.81% |
Spread | Daily | ||||
vs Bund | change in | ||||
Czech Republic | spread | ||||
2-year | CZ2YT=RR | 4.1090 | 0.0120 | +134bps | +6bps |
5-year | CZ5YT=RR | 4.1050 | 0.0190 | +172bps | +7bps |
10-year | CZ10YT=RR | 4.2050 | 0.0210 | +183bps | +7bps |
Poland | |||||
2-year | PL2YT=RR | 5.1800 | -0.0310 | +241bps | +2bps |
5-year | PL5YT=RR | 5.6090 | -0.0420 | +322bps | +1bps |
10-year | PL10YT=RR | 5.7790 | -0.0590 | +341bps | -1bps |
FORWARD | |||||
3x6 | 6x9 | 9x12 | 3M interbank | ||
Czech Rep | CZKFRAPRIBOR= | 4.58 | 4.21 | 4.02 | 5.04 |
Hungary | HUFFRABUBOR= | 7.18 | 6.94 | 6.70 | 6.87 |
Poland | PLNFRAWIBOR= | 5.81 | 5.65 | 5.38 | 5.85 |
Note: FRA quotes | are for ask prices | ||||
************************************************************** |
Additional reporting by Alan Charlish in Warsaw and Jason Hovet in Prague; Editing by Shinjini Ganguli
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