Forint recoups losses on high cenbank interest rates
BUDAPEST — The Hungarian forint led
gains in the CEE region on Tuesday, recouping losses from the
previous session, supported by the central bank’s daily quick
deposit facility that offers 18% interest.
The forint firmed 1.07% to 405.40 per euro, after
falling to nearly 411 in the previous session.
“High central bank rates will keep the forint from
significant weakening, we can already see the correction from
yesterday’s levels,” an fx trader in Budapest said.
“Hungary sold eurobonds yesterday, which probably
contributed to the weakening, as it could make some investors
question why it was needed when the government says that a deal
on EU funds is near.”
The country issued 1 billion euros ($1.04 billion) worth of
green Eurobonds on Monday. The country last issued foreign
currency benchmark bonds in June, after lifting its 2022 foreign
currency borrowing target amid a stand-off with the European
Union over access to billions of euros in funding.
A deal between Hungary and the Euopean Union on the funds
would be key for the forint to strengthen significantly past the
400 level, traders and analysts have said.
Third-quarter gross domestic product (GDP) data published on
Tuesday showed a contraction for the fist time in two years as
the Hungarian economy shrank 0.4% quarter-on-quarter, but it did
not affect markets as it was mostly in line with estimates,
In GDP data releases around the region on Tuesday, the
impact of decades-high inflation was becoming more evident
although some economies were still holding up for now.
The Polish zloty added 0.32% to trade at 4.7010 versus the
common currency as data showed that the economy grew 3.5%
year-on-year in the third quarter while October inflation came
in at 17.9% year-on-year.
The zloty’s rate, however, was more influenced by global
factors such as the dollar’s strength, energy prices and a
cessation of interest rate hikes in the CEE region than local
data, PKO Bank wrote in a note.
“Therefore … we believe that the EUR/PLN exchange rate
should stay close to 4.70,” PKO Bank wrote.
Elsewhere, the Czech crown and the Romanian leu
were little moved.
Stock markets in the region retreated, with Warsaw’s
equities down 0.16% while Budapest shares fell
CEE SNAPSH AT
MARKETS OT 1046
Latest Previo Daily Change
bid close change in
Note: calculated from 1800
Latest Previo Daily Change
close change in
Prague 1255.7 1257.3 -0.13%
Budapes 44063. 44157. -0.21% -13.13
t 18 71 %
Warsaw <.wig20> 7 9 %
Buchare 11592. 11625. -0.28% -11.24
st 68 07 %
Ljublja <.sbito na p> 7 7 % %
Zagreb <.crbex> 0 6
Belgrad <.belex e> %
Sofia <.sofix> %
Yield Yield Spread Daily
(bid) change vs change
3×6 6×9 9×12 3M
Note: are for ask
($1 = 0.9609 euros)
(Additional reporting by Alan Charlish in Warsaw;
Editing by Vinay Dwivedi)
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