Hike rates

CEE MARKETS-Forint, zloty extend gains after central bank rate hike

By Krisztina Than and Alan Charlish BUDAPEST/WARSAW, March 9 (Reuters) – The Hungarian forint jumped nearly 2% on Wednesday, rebounding from record lows hit earlier this week as new data, which showed a inflation at 8.3%, fueled expectations of increased interest rate hikes. The Polish forint and zloty already started rebounding on Tuesday after sharp falls after the Polish and Hungarian central banks raised interest rates, bringing some relief to the currencies hit by rising economic concerns following the invasion of Ukraine by Russia. A Budapest dealer said panic in the market had subsided and inflation data also helped the forint’s gains. “The market is now looking for a new kind of equilibrium,” he said. Poland’s central bank raised its benchmark rate on Tuesday, although the 75 basis point hike missed some market expectations that had seen chances of a hike of up to 100 basis points. The National Bank of Hungary (NBH) also raised the top of its interest rate corridor by 100 basis points to 6.4% to create room for further policy tightening. The next move will come on Thursday, when the bank sets the rate on its one-week deposit facility, which is intended to manage short-term market volatility and support the forint. The forint, which fell to an all-time low of 400 against the euro on Monday, rose 1.82%, trading at 381.80, extending Tuesday’s gains. Data showed that Hungarian inflation continued to rise in February despite price caps in place on some staple foods, fuel and energy, reflecting strong price pressures in central Europe exacerbated by the war in neighboring Ukraine. The zloty was also up 2% to 4.843 against the euro, after the bank raised its main policy rate by 75 basis points to 3.5% and substantially raised its inflation forecast due to the economic impact of the war in Ukraine. Polish central bank governor Adam Glapinski will hold a press conference at 14:00 GMT. “The press conference (…) will be important as it is expected to outline the outlook for monetary policy in Poland and will likely show strong central bank determination to strengthen the zloty,” Bank Millennium analysts said in a note. . Elsewhere, the Czech koruna added 1.1%. Most stocks in the region also firmed, with the Budapest BUX gaining 4.2%, led by OTP Bank whose shares jumped 8.6% in a positive correction after recent sharp falls. Prague gained 2.3% while Warsaw rose 2.2%. CEE MARKET OVERVIEW T 0933 CET CURRENC IES Last previous daily change s bid close change in 2022 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 in 2022 .PX Prague 1291.22 1261.64 +2 .34% N/A 00 .BUX Budapest 43283.6 41515.5 +4.26% -14.66% 0 0 .WIG20 Warsaw <.wig20> .BETI18 15.38% Bucharest -9.53% t 7 2 .SBITO Ljubljan <.sbito p a> .CRBEX Zagreb <.crbex> .BELEX Belgrade <.belex> .SOFIX Sofia <.sofix> Yield Yield Spread Daily change (bid) vs Bund spread change Czech Republic CZ2YT= 2 years s CZ5YT= 5 years s CZ10YT s Poland PL2YT= 2 years PL5YT= 5 years PL10YT s FORWARD 3×6 6×9 9×12 3M interba nk Czech Hungary Poland Note: are to ask the prices FRA **************** ******** ******************* ****************** (Additional reporting by Jason Hovet in Prague; Editing by Rashmi Aich)