FX moves sideways as markets eye incoming Trump administration
By Alan Charlish
WARSAW, Nov 12 (Reuters) -Central European currencies stayed on the back foot on Tuesday as the dollar firmed and investors watched for signals as to how Donald Trump will implement his policy agenda in the United States.
Emerging market currencies have been under pressure since Trump's election victory last week as the dollar strengthened on expectations his tariff and immigration policies could push up inflation, limiting scope for U.S. interest rate cuts.
"I think the Trump trade is back, the dollar is stronger ... so there is pressure on EM currencies," a Warsaw-based FX trader said.
At 0912 GMT the Czech crown EURCZK= was flat against the euro at 25.345 while the Polish zloty EURPLN= was 0.10% firmer at 4.356.
However, analysts do not expect the calm in the region's currency markets to last.
"We should expect an elevated exchange rate volatility to continue, and the dynamics will be determined, among others, by any statements and signals from D. Trump and/or his associates, and then by decisions of the new administration on the implementation of election promises and key policy directions," Santander Bank Polska analysts said in a note.
The Hungarian forint EURHUF=, the region's worst performing currency this year, was 0.10% firmer at 410.0, having hit its lowest level since December 2022 last week.
The currency's slide forced the central bank to pause rate cuts in October.
On Tuesday, data from Hungary's statistics office showed inflation rose back above the central bank's target range in October, raising the likelihood of it leaving its base rate steady.
"The forint's fast weakening, increased volatility and a deterioration in risk appetite (mean) the central bank can continue to remain cautious," Erste Bank analysts said in a note. "We expect the base rate to stay unchanged at 6.5% at the next Nov. 19 rate meeting."
The Romanian leu EURRON= was little changed at 4.9765.
CEE MARKETS | SNAPSHOT | AT 1012 CET | ||||
CURRENCIES | ||||||
Latest | Previous | Daily | Change | |||
trade | close | change | in 2024 | |||
EURCZK= | Czech crown | EURCZK= | 25.3450 | 25.3450 | +0.00% | -2.54% |
EURHUF= | Hungary forint | EURHUF= | 410.0000 | 410.4000 | +0.10% | -6.54% |
EURPLN= | Polish zloty | EURPLN= | 4.3560 | 4.3605 | +0.10% | -0.26% |
EURRON= | Romanian leu | EURRON= | 4.9765 | 4.9758 | -0.01% | -0.04% |
EURRSD= | Serbian dinar | EURRSD= | 116.9000 | 116.9800 | +0.07% | +0.30% |
Note: daily change | calculated from | 1800 CET | ||||
Latest | Previous | Daily | Change | |||
close | change | in 2024 | ||||
.PX | Prague | .PX | 1671.60 | 1670.0800 | +0.09% | +18.22% |
.BUX | Budapest | .BUX | 76954.44 | 76890.10 | +0.08% | +26.95% |
.WIG20 | Warsaw | .WIG20 | 2287.94 | 2298.30 | -0.45% | -2.35% |
.BETI | Bucharest | .BETI | 17572.76 | 17519.99 | +0.30% | +14.32% |
Spread | Daily | |||||
vs Bund | change in | |||||
Czech Republic | spread | |||||
CZ2YT=RR | 2-year | CZ2YT=RR | 3.3870 | 0.0180 | +124bps | +1bps |
CZ5YT=RR | 5-year | CZ5YT=RR | 3.6780 | 0.0820 | +152bps | +7bps |
CZ10YT=RR | 10-year | CZ10YT=RR | 3.9970 | 0.0260 | +167bps | +2bps |
Poland | ||||||
PL2YT=RR | 2-year | PL2YT=RR | 4.9920 | 0.0710 | +285bps | +6bps |
PL5YT=RR | 5-year | PL5YT=RR | 5.4090 | 0.0850 | +325bps | +8bps |
PL10YT=RR | 10-year | PL10YT=RR | 5.8110 | 0.1240 | +348bps | +12bps |
FORWARD RATE AGREEMENTS | ||||||
3x6 | 6x9 | 9x12 | 3M interbank | |||
Czech Rep | CZKFRAPRIBOR= | 3.72 | 3.54 | 3.35 | 3.95 | |
Hungary | HUFFRABUBOR= | 6.90 | 6.72 | 6.52 | 6.51 | |
Poland | PLNFRAWIBOR= | 5.69 | 5.23 | 4.91 | 5.84 | |
Note: FRA quotes | are for ask prices | |||||
************************************************************** | ||||||
Reporting by Alan Charlish in Warsaw, Kisztina Than in Budapest, Luiza Ilie in Bucharest; editing by Christina Fincher
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