FX slips with market focus on Hungarian rating review

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WARSAW — Central European currencies were mainly on the back foot on

Thursday, as markets eyed data on economic growth in the United States and a review of Hungary’s

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credit rating.

The forint has posted strong gains this week, boosted by a central bank pledge to

keep its one-day deposit rate at 18% and raise the required reserve ratio for commercial banks

from April.

The Hungarian currency, however, was 0.26% weaker against the euro at 388.55 by 1014 GMT on

Thursday, as investors eyed a rating review from S&P scheduled for Friday, just a week after

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Fitch cut the outlook on Hungary’s rating to negative from stable, citing policy weaknesses in a

tough environment.

“We saw quite a big rally in the past couple of days so first of all this might be just some

type of temporary correction,” said Peter Virovacz, senior economist at ING in Hungary.

“Tomorrow Hungary is facing a ratings decision from S&P… after Fitch cut Hungary’s outlook

from stable back to negative I guess the market is quite anxious that maybe S&P could continue

this trend.”

Meanwhile, markets are looking ahead to a report on fourth-quarter U.S. gross domestic

product that is expected to show a strong pace of growth, but with momentum slowing towards the

end of the year.

“The U.S. data could have a significant impact on currency markets so investors are on the

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sidelines,” Magyar Bankholding analysts said in a note.

The Czech crown was broadly stable at 23.787, hovering around 14-year highs after

hitting its strongest level since October 2008 on Wednesday.

“The continuing combination of favorable weather and falling forward and spot gas prices is

still primarily behind the strong Czech currency,” CSOB said in a note. “These are helping

mainly via better global sentiment – more stable returns and a weaker U.S. dollar,” it added.

The Polish zloty was 0.12% weaker at 4.7225.

“We are moving towards the upper-band of a tight range,” said Mateusz Sutowicz, a financial

market analyst at Bank Millennium. “The weakening pressure is mounting, mainly due to local

factors … geopolitical tension regarding Ukraine but also that we still do not have any

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breaking information about the recovery fund.”

CEE SNAPSHO AT

MARKETS T 1114

CET

CURRENC

IES

Latest Previou Daily Change

s

bid close change in 2023

EURCZK= Czech 23.7870 23.7820 -0.02% +1.56%

crown

EURHUF= Hungary 388.550 387.550 -0.26% +2.80%

forint 0 0

EURPLN= Polish 4.7225 4.7170 -0.12% -0.70%

zloty

EURRON= Romanian 4.8865 4.8981 +0.24% +1.15%

leu

EURHRK= Croatian 7.5330 7.5365 +0.05% +0.05%

kuna

EURRSD= Serbian 117.270 117.370 +0.09% +0.03%

dinar 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change

s

close change in 2023

.PX Prague 1315.65 1302.99 +0.97% +9.48%

00

.BUX Budapest 46861.6 46249.0 +1.32% +7.01%

3 5

.WIG20 Warsaw 1902.48 1886.24 +0.86% +6.16%

.BETI Buchares 12249.8 12182.8 +0.55% +5.03%

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t 4 6

.SBITOP Ljubljan 1112.05 1111.81 +0.02% +6.03%

a

.CRBEX Zagreb 2119.20 2107.03 +0.58% +706.4

8%

.BELEX1 Belgrade 839.79 851.88 -1.42% +1.84%

5

.SOFIX Sofia 615.97 614.45 +0.25% +2.41%

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT=R 2-year 5.9550 0.2900 +340bp +27bps

R s

CZ5YT=R 5-year 4.8590 0.0060 +266bp -1bps

R s

CZ10YT= s

Poland

PL2YT=R 2-year 5.9800 -0.1090 +343bp -13bps

R s

PL5YT=R 5-year 5.8920 0.0000 +370bp -2bps

R s

PL10YT= s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech

Hungary

Poland

Note: are for ask prices

FRA

quotes

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(Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague, Krisztina Than in Budapest;

Editing by Sherry Jacob-Phillips)