WARSAW, June 28 (Reuters) - Central Europe's currencies
rose on Friday, with the crown recovering some ground after
falling to eight-week lows when the Czech central bank delivered
a fourth-straight 50-basis-point interest rate cut that only a
minority in the market expected.
The crown had closed around 0.7% lower on Thursday after the
Czech National Bank (CNB) cut its key two-week repo rate to
4.75%. The decision caught many off guard, as most analysts
polled had expected a smaller 25-basis-point reduction.
The bank, while opting for a bigger cut now, signalled a
likely slowdown in its easing cycle that started last December,
lending some support to the currency, which is still ending the
quarter stronger than the bank's assumptions.
The crown is also set for its first quarterly gain since the
start of 2023, after firming in recent months due to investors
scaling back rate cut expectations.
Goldman Sachs, though, said weakening underlying inflation
dynamics could mean the Czech central bank will cut rates over
the next year more than markets currently price.
At 0843 GMT, the crown was up 0.1% against the
euro at 25.0260.
Bank CSOB said Thursday's rate cut, along with French
election jitters, will keep the crown under some pressure.
The Czech decision comes as other central banks in central
Europe slow rate cuts or keep policy on hold as service prices
continue to rise and major central banks' easing paths remain
uncertain.
In Hungary, the central bank has also slowed its easing
pace.
The forint, which has been central and eastern
Europe's worst performing currency this year with a 3% drop, was
0.4% firmer at 395.2500 per euro on Friday.
"Markets are calm, so my guess is that the forint firms due
to the widening rate difference between the forint and the
crown," a local trader said.
The zloty firmed 0.2% to 4.3085. Inflation in
Poland was slightly higher than expected in June, a flash
estimate showed on Friday, as food prices rose. But it is set to
rise further in the coming months.
Investors will be looking ahead to key U.S. inflation data
later in the day for clues on the timing of Federal Reserve
interest rate cuts, as well as results of the first round of
general elections in France over the weekend.
Stock markets in the region rose, with the Warsaw main index
and Prague's gaining 0.8%.
CEE SNAPSHOT AT
MARKETS 1043
CET
CURRENCI
ES
Latest Previou Daily Change
s
trade close change in 2024
EURCZK= Czech
EURHUF= Hungar 0
forint
EURPLN= Polish
EURRON= Romani
EURRSD= Serbia 0
dinar
Note: calculat 1800
daily ed from CET
change
Latest Previou Daily Change
s
close change in 2024
.PX Prague 1537.48 1524.86 +0.83% +8.73%
00
.BUX Budape 71759.18 71492.8 +0.37% +18.38%
st 1
.WIG20 Warsaw 2568.70 2547.78 +0.82% +9.63%
.BETI Buchar 18100.43 18057.7 +0.24% +17.76%
est 8
Spread Daily
vs Bund change in
Czech spread
Republ
ic
CZ2YT=R s
CZ5YT=R s
CZ10YT= s
r
Poland
PL2YT=R s
PL5YT=R s
PL10YT= s
r
FORWARD
RATE
AGREEMEN
TS
3x6 6x9 9x12 3M
interbank
Czech 4.39 4.13 3.92 4.97
Rep
Hungar 7.14 6.88 6.61 6.89
y
Poland 5.79 5.65 5.34 5.85
Note: are for
FRA ask
quotes prices
**************************
**************************
**********
(Reporting by Alan Charlish and Anna Wlodarczak-Semczuk in
Warsaw; Boldizsar Gyori in Budapest and Jason Hovet in Prague,
editing by Emelia Sithole-Matarise)
FX slightly up, Czech crown recovers from 8-week low
June 28, 2024 at 03:01 pm IST
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