FX eases as geopolitical tensions weigh
By Anita Komuves
BUDAPEST, Nov 20 (Reuters) -The Hungarian forint led losses among central European currencies which were pressured by geopolitical tensions and a strengthening dollar, while stock markets rebounded after a plunge in the previous session.
The forint EURHUF= fell 0.6% to trade at 409.8 per euro.
"Geopolitical events are driving markets, they switched into a risk-off mode due to the heightening tensions in the Ukraine-Russia war ... also, the dollar has just started strengthening again, which adds to the pressure," an FX trader in Budapest said.
The U.S. dollar climbed from a one-week low on Wednesday, recovering from a three-day slide.
The forint has been the most affected in the CEE region by recent geopolitical tensions and the re-election of Donald Trump, whose trade tariff plans could hit central Europe.
The currency has lost more than 6% so far this year and fell to an almost 23-month low of 412.50 to the euro in earlier this month.
On Tuesday the National Bank of Hungary left its base rate steady at 6.5%, the highest in the European Union alongisde Romania. The bank has warned that currency falls are feeding into prices more quickly than before, raising upside risks to inflation.
"Given the importance the (central bank) places on exchange rate developments, we continue to think the level of the Forint acts as the ‘binding constraint’ on the pace of rate reduction," Goldman Sachs wrote in a note.
Analysts at ING said that "much of the reason behind the FX weakness is not in the hands of NBH but is directed at the global story. ... The pressure on FX, as in the rest of the CEE region, is here to stay for longer."
The Polish zloty EURPLN= extended its losses from the previous session and was 0.2% weaker and trading at 4.3400 to the euro while the Czech crown EURCZK= edged down.
Stock markets regained some losses after being rattled on Tuesday by Ukraine's use of U.S. missiles to strike Russia and Moscow lowering the threshold for a possible nuclear strike.
Budapest's stock exchange added 1.2% while Warsaw's blue chip index gained 1% after its biggest drop in more than two years in the previous session.
CEE MARKETS | SNAPSHOT | AT 1103 CET | ||||
CURRENCIES | ||||||
Latest | Previous | Daily | Change | |||
trade | close | change | in 2024 | |||
EURCZK= | Czech crown | EURCZK= | 25.2800 | 25.2650 | -0.06% | -2.29% |
EURHUF= | Hungary forint | EURHUF= | 409.8000 | 407.4000 | -0.59% | -6.49% |
EURPLN= | Polish zloty | EURPLN= | 4.3395 | 4.3310 | -0.20% | +0.12% |
EURRON= | Romanian leu | EURRON= | 4.9762 | 4.9770 | +0.02% | -0.04% |
EURRSD= | Serbian dinar | EURRSD= | 116.8800 | 116.9900 | +0.09% | +0.31% |
Note: daily change | calculated from | 1800 CET | ||||
Latest | Previous | Daily | Change | |||
close | change | in 2024 | ||||
.PX | Prague | .PX | 1687.79 | 1677.6400 | +0.61% | +19.36% |
.BUX | Budapest | .BUX | 78936.28 | 77965.78 | +1.24% | +30.21% |
.WIG20 | Warsaw | .WIG20 | 2145.75 | 2123.35 | +1.05% | -8.42% |
.BETI | Bucharest | .BETI | 17320.30 | 17143.34 | +1.03% | +12.68% |
Spread | Daily | |||||
vs Bund | change in | |||||
Czech Republic | spread | |||||
CZ2YT=RR | 2-year | CZ2YT=RR | 3.3530 | -0.0130 | +121bps | -1bps |
CZ5YT=RR | 5-year | CZ5YT=RR | 3.6930 | 0.0350 | +151bps | +2bps |
CZ10YT=RR | 10-year | CZ10YT=RR | 3.9730 | 0.0170 | +162bps | +0bps |
Poland | ||||||
PL2YT=RR | 2-year | PL2YT=RR | 4.9640 | 0.0070 | +283bps | +1bps |
PL5YT=RR | 5-year | PL5YT=RR | 5.3160 | 0.0140 | +313bps | +0bps |
PL10YT=RR | 10-year | PL10YT=RR | 5.6860 | 0.0420 | +333bps | +3bps |
FORWARD RATE AGREEMENTS | ||||||
3x6 | 6x9 | 9x12 | 3M interbank | |||
Czech Rep | CZKFRAPRIBOR= | 3.72 | 3.52 | 3.41 | 3.92 | |
Hungary | HUFFRABUBOR= | 6.85 | 6.51 | 6.21 | 6.50 | |
Poland | PLNFRAWIBOR= | 5.68 | 5.10 | 4.65 | 5.85 | |
Note: FRA quotes | are for ask prices | |||||
************************************************************** | ||||||
Editing by Toby Chopra
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