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Crown touches 6-week low, FX under pressure from dollar



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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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