Forint eases as Hungary central bankers likely to keep rates on hold
By Anita Komuves
BUDAPEST, Nov 19 (Reuters) -The forint drifted on Tuesday before a Hungarian central bank meeting where policymakers are likely to keep its rate-cutting drive paused amid global uncertainties putting pressure on the currency.
The forint EURHUF=, which had bottomed out at an almost 23-month low of 412.50 to the euro this month, had eased 0.1% to 407.15 per euro by 0928 GMT, giving up early gains.
The forint and central European peers are facing pressure from uncertainties surrounding Donald Trump's next U.S. presidency and its economic and market implications.
On Monday, President Joe Biden's decision to allow Ukraine to use U.S. arms to strike deep inside Russia added to geopolitical tensions, which further weighed on emerging currencies.
The forint has shed nearly 3% since the Hungarian central bank's (MNB) last interest rate cut on Sept. 24. It is down around 6% against the euro this year, making it the region's worst-performing currency.
"Although the forint has recovered somewhat, the last two weeks have shown how vulnerable it is," Commerzbank said in a client note.
"In this respect, the MNB should show resolve today, even indicating raising interest rates again if necessary, in order to clearly signal to the market that it is prepared to stabilize the exchange rate."
A Reuters poll of analysts expects the base rate to remain on hold at 6.5%, which is currently the highest in the European Union, alongside Romania. The bank is scheduled to announce its decision at 1300 GMT and publish its statement and hold a press conference at 1400 GMT.
Elsewhere, the Czech crown EURCZK= eased 0.1% and was trading at 25.322 versus the euro. The Polish zloty EURPLN= lost 0.5% to trade at 4.3345 per euro.
Rate setters in Poland, where central bank rates have been kept unchanged unlike in Hungary or the Czech Republic, said last week that the Monetary Policy Council could start talking about rate cuts in March.
"If the market starts speculating on the scale of rate cuts ... it will probably not be positive for the zloty if global tensions are still visible and the dollar remains relatively strong," DM BOS wrote in a note.
CEE MARKETS | SNAPSHOT | AT 1028 CET | |||
CURRENCIES | |||||
Latest | Previous | Daily | Change | ||
trade | close | change | in 2024 | ||
Czech crown | EURCZK= | 25.3220 | 25.2960 | -0.10% | -2.45% |
Hungary forint | EURHUF= | 407.1500 | 406.9000 | -0.06% | -5.89% |
Polish zloty | EURPLN= | 4.3345 | 4.3135 | -0.48% | +0.23% |
Romanian leu | EURRON= | 4.9769 | 4.9760 | -0.02% | -0.05% |
Serbian dinar | EURRSD= | 116.8800 | 116.9800 | +0.09% | +0.31% |
Note: daily change | calculated from | 1800 CET | |||
Latest | Previous | Daily | Change | ||
close | change | in 2024 | |||
Prague | .PX | 1683.53 | 1675.9800 | +0.45% | +19.06% |
Budapest | .BUX | 78789.79 | 79253.01 | -0.58% | +29.97% |
Warsaw | .WIG20 | 2141.90 | 2184.70 | -1.96% | -8.58% |
Bucharest | .BETI | 17371.61 | 17423.52 | -0.30% | +13.01% |
Spread | Daily | ||||
vs Bund | change in | ||||
Czech Republic | spread | ||||
2-year | CZ2YT=RR | 3.3580 | -0.0130 | +128bps | +7bps |
5-year | CZ5YT=RR | 3.6580 | -0.0490 | +156bps | +6bps |
10-year | CZ10YT=RR | 3.9410 | -0.0600 | +167bps | +4bps |
Poland | |||||
2-year | PL2YT=RR | 4.9570 | -0.1430 | +287bps | -6bps |
5-year | PL5YT=RR | 5.3730 | -0.0090 | +328bps | +10bps |
10-year | PL10YT=RR | 5.6690 | -0.0450 | +340bps | +6bps |
FORWARD RATE AGREEMENTS | |||||
3x6 | 6x9 | 9x12 | 3M interbank | ||
Czech Rep | CZKFRAPRIBOR= | 3.72 | 3.54 | 3.35 | 3.93 |
Hungary | HUFFRABUBOR= | 6.84 | 6.52 | 6.18 | 6.50 |
Poland | PLNFRAWIBOR= | 5.69 | 5.08 | 4.66 | 5.85 |
Note: FRA quotes | are for ask prices | ||||
************************************************************** | |||||
Additional reporting by Anna Wlodarczak-Semczuk in Warsaw, Editing by William Maclean
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