Band Krisztina Than and Alan Charlish
BUDAPEST/WARSAW, March 9 (Reuters) – Hungarian forint EURHUF= jumped nearly 2% on Wednesday, rebounding from record lows reached earlier this week, as new data, which showed inflation at 8.3%, fueled expectations of further interest rate hikes.
The Polish forint and zloty EURPLN= already started to rebound on Tuesday after sharp falls after the Polish and Hungarian central banks raised interest rates, bringing some relief to currencies battered by rising economic concerns following Russia’s invasion of Ukraine .
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 crown EURCZK= added 1.1%.
Most stocks in the region also firmed, with Budapest BUX gaining 4.2%, led by OTP Bank OTPB.BU whose shares jumped 8.6% in a positive correction after recent sharp falls.
prague .PX added 2.3% while Warsaw .WIG20 increased by 2.2%.
At 09:33 CET
lei in Romanian
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+406 basis points
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+481 basis points
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are for asking prices
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(Additional reporting by Jason Hovet in Prague; Editing by Rashmi Aich)
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