Currencies move sideways, forint softens as investors assess 2023 outlook

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BUDAPEST — Hungary’s forint eased

slightly on Monday, while its peers were stable in Central

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Europe as investors assessed 2023 prospects after a tumultuous

2022 when inflation soared to double-digits, and central banks

ramped up interest rates.

Central Europe’s currencies diverged in 2022, with the crown

faring the best with a 3% gain after its central bank started

market interventions in May to prevent a plunge in the currency.

The Czech bank ended its rate hikes just as global central

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banks started tightening. The Hungarian and Polish central banks

are also holding their respective rates now, with the Polish

central bank the first to have a rate meeting in the new year in

the region on Wednesday.

“We forecast the NBP to leave rates unchanged at +6.75%, in

line with consensus expectations,” Goldman Sachs said in a note.

“We also do not expect significant changes to the NBP’s

guidance, and expect the Council and Governor Glapinski to

reiterate the dovish guidance for rate stability.”

On Monday, Poland’s zloty was flat versus the

euro. It lost 2% in 2022, outperforming the Hungarian forint

which depreciated by more than 7% last year amid

Budapest’s disputes with the European Union over rule-of-law

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issues that have held up funds from Brussels.

The forint was down 0.2% at 401 to the euro in thin

mid-morning trade on Monday.

“The beginning of 2023 on the domestic currency market

should start calmly. The EUR/PLN exchange rate is moving around

the level of 4.68 and remains in a sideways trend with limits at

4.6624 and 4.7070, respectively,” Bank Millennium said.

The first PMI data from the region on Monday showed that

manufacturing slumps in Poland and the Czech Republic eased

slightly in December although activity remained deep in negative

territory, with high prices cutting demand and firms reducing

staff in response, signaling a difficult year ahead.

Hungary’s seasonally-adjusted PMI jumped to 63.1 in December

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from a revised 56.0 in November, remaining an outlier in the

region, as new orders were strong in December. But the Hungarian

economy is also slowing sharply, even though the government

hopes it can still grow by 1.5%.

CEE SNAPSHO AT

MARKETS T 1030

CET

CURRENC

IES

Latest Previou Daily Change

s

bid close change in 2023

EURHUF Hungary 0 0

EURPLN Polish

EURRON Romanian

EURHRK Croatian

EURRSD Serbian 0 0

Note: calcula 1800

daily ted CET

change from

Latest Previou Daily Change

s

close change in 2023

.PX Prague 1209.76 1201.73 +0.67% +0.67%

00

.BUX Budapest 43568.2 43793.7 -0.51% -0.51%

3 6

.WIG20 Warsaw <.wig20>

.BETI Buchares 11663.5 11663.5 +0.00% +0.00%

t 3 3

.SBITO Ljubljan <.sbito p a>

.CRBEX Zagreb <.crbex>

.BELEX Belgrade <.belex>

.SOFIX Sofia <.sofix>

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year s

CZ5YT= 5-year s

CZ10YT s

Poland

PL2YT= 2-year s

PL5YT= 5-year s

PL10YT s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech

Hungary

Poland

Note: are for

FRA ask

quotes prices

***********************************

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(Reporting by Krisztina Than in Budapest, Jason Hovet in Prague

and Alan Charlish in Warsaw, Editing by Louise Heavens)