PRAGUE — Central European currencies
strengthened on Wednesday, as interest rate hike views stayed in
sight for now, while stock markets continued to rebound.
The Czech crown gained 0.2% to 24.678 against the
euro, keeping stronger after the central bank stepped into
markets last week to intervene to stop a sharp decline as the
country’s interest rate outlook faces uncertainty.
Markets expect a hefty rate hike when the Czech bank meets
again in June, sitting under the current board composition for
the last time before a new governor, who has called for an end
to the sharp policy tightening seen over the past year.
Ales Michl, a current central bank board member who has
voted against rate hikes, is due to take over in July, and the
president still must decide on who will fill his seat and
whether to re-appoint two other members, both having backed
tightening. Replacing them could sway the balance in the board.
Czech central banker Tomas Holub was quoted as saying on
Tuesday that it would not make sense to try to tame surging
inflation and reject both interest rate hikes and exchange rate
interventions at the same time.
“On the one hand, the crown can enjoy lower tensions in
global markets and the recent central bank interventions, but on
the other hand, uncertainty connected with the change of the
central bank board remains extreme,” CSOB analysts said in a
“The new make-up of the board and the degree of
discontinuity will without a doubt be key for the crown in the
Central Europe’s rate setters have been in sharp policy
tightening mode since last year as inflation reaches
double-digits or close to it.
Hungary’s central bank said last week the aggressive period
of rate tightening was over, although Deputy Governor Barnabas
Virag said on Tuesday that Hungary needed positive real interest
rates to wrestle down inflation over the medium term.
That has bucked up the forint, which rose 0.6% on
Wednesday to lead gains. It was trading at 384.00 to the euro
and has wiped out losses seen since last Friday.
In Poland, the zloty was steady at 4.649 to the
euro, and Romania’s leu was hanging at 4.947 per euro.
“The potential for the appreciation of the Polish currency
seems limited, and its scope will depend on the tendencies on
the eurodollar market,” Bank Millennium said.
Stock markets gained along with global peers, with Budapest
up 1.6% to pace the region. Stocks have climbed after
hitting multi-week lows last week.
CEE SNAPSHO AT
MARKETS T 1200
Latest Previou Daily Change
bid close change in 2022
Note: calculated from 1800
Latest Previou Daily Change
close change in 2022
.PX Prague 1322.83 1309.89 +0.99% #VALUE!
.BUX Budapest 42577.9 41906.5 +1.60% -16.05%
.WIG20 Warsaw <.wig20>
.BETI Buchares 12123.1 12054.8 +0.57% -7.18%
t 6 1
.SBITO Ljubljan <.sbito p a>
.CRBEX Zagreb <.crbex>
.BELEX Belgrade <.belex>
.SOFIX Sofia <.sofix>
Yield Yield Spread Daily
(bid) change vs Bund change
3×6 6×9 9×12 3M
Note: are for ask
(Reporting by Jason Hovet in Prague and Alan Charlish in
Warsaw; Editing by Rashmi Aich)