Zloty holds firm as forint, crown retreat
Dec 18 (Reuters) -The Czech crown fell for a third straight day from a three-month peak while the Hungarian forint continued easing on Wednesday, with a stronger dollar before the U.S. Federal Reserve meeting weighing on the central European currencies.
Poland's zloty bucked the trend, inching up 0.2% to 4.261 per euro and staying near its highest levels since September.
Attention was turned to the Fed, which was expected to cut interest rates by a quarter point, but to signal a cautious approach to loosening monetary policy next year.
On Tuesday, Hungary's central bank left its base rate, at the European Union's joint highest level of 6.5%, unchanged for a third month.
On Thursday, the Czech central bank is seen joining others in central Europe by pausing its one-year easing drive. That would mark the first time since Hungary started cutting rates in May 2023 that all four of the region's central banks have kept rates on hold in the same month.
"Despite our fundamentally dovish inflation forecasts and some signs that the (Hungarian central bank) is willing to allow for some more FX weakness, we continue to think the level of the forint will act as the ‘binding constraint’ on the pace of rate reductions," Goldman Sachs said in a note.
The forint EURHUF= fell 0.2% to 410.70 to the euro on Wednesday, retreating for a second day from a four-week high of 408.05.
The crown EURCZK= also continued to ease and fell 0.15% to 25.128 per euro, having given up attempts to firm past the psychological 25 level last week.
Analysts widely expect the Czech central bank to pause rate cuts - which have totalled 300 basis points in the past year -this month before returning to its easing cycle in the first quarter next year.
Bank CSOB analysts said for now the Fed meeting would be the main driver for the crown.
"In view of the market pricing in a hawkish rate cut, it will be difficult to deliver a major surprise, which could leave risk assets like the crown without major shocks," CSOB said.
Similarly, the zloty was seen sticking to its current trend in the near term, before renewed pressure later. The zloty is the only major currency in the region to gain this year, helped by a pause in interest rate cuts since last year.
"Data from the domestic economy, which will be known at the end of the week, may sow investors' doubts about the hawkish (Polish central bank)," ING said.
"In the medium term, we may still see an increase in EUR/PLN above 4.30, mainly due to geopolitical risks" like U.S. decisions on tariffs or the war in Ukraine.
CEE MARKETS | SNAPSHOT | AT 1148 CET | |||
CURRENCIES | |||||
Latest | Previous | Daily | Change | ||
trade | close | change | in 2024 | ||
Czech crown | EURCZK= | 25.1280 | 25.0900 | -0.15% | -1.70% |
Hungary forint | EURHUF= | 410.7000 | 409.7500 | -0.23% | -6.70% |
Polish zloty | EURPLN= | 4.2610 | 4.2700 | +0.21% | +1.96% |
Romanian leu | EURRON= | 4.9757 | 4.9754 | -0.01% | -0.03% |
Serbian dinar | EURRSD= | 116.8900 | 116.9500 | +0.05% | +0.30% |
Note: daily change | calculated from | 1800 CET | |||
Latest | Previous | Daily | Change | ||
close | change | in 2024 | |||
Prague | .PX | 1757.09 | 1749.4000 | +0.44% | +24.26% |
Budapest | .BUX | 79286.89 | 78829.20 | +0.58% | +30.79% |
Warsaw | .WIG20 | 2227.61 | 2211.89 | +0.71% | -4.92% |
Bucharest | .BETI | 16922.71 | 17155.99 | -1.36% | +10.09% |
Spread | Daily | ||||
vs Bund | change in | ||||
Czech Republic | spread | ||||
2-year | CZ2YT=RR | 3.3300 | -0.0060 | +129bps | +1bps |
5-year | CZ5YT=RR | 3.7840 | 0.0480 | +171bps | +4bps |
10-year | CZ10YT=RR | 4.0860 | -0.0070 | +183bps | -3bps |
Poland | |||||
2-year | PL2YT=RR | 5.1140 | 0.0140 | +307bps | +3bps |
5-year | PL5YT=RR | 5.5340 | 0.0300 | +346bps | +2bps |
10-year | PL10YT=RR | 5.9200 | 0.0300 | +367bps | +1bps |
FORWARD RATE AGREEMENTS | |||||
3x6 | 6x9 | 9x12 | 3M interbank | ||
Czech Rep | CZKFRAPRIBOR= | 3.90 | 3.74 | 3.64 | 3.91 |
Hungary | HUFFRABUBOR= | 6.59 | 6.30 | 6.09 | 6.50 |
Poland | PLNFRAWIBOR= | 5.74 | 5.41 | 5.14 | 5.86 |
Note: FRA quotes | are for ask prices | ||||
************************************************************** | |||||
Reporting by Jason Hovet in Prague. Editing by Mark Potter
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