Hungarian forint cools as EU funds stay in focus

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PRAGUE — The Hungarian forint cooled

on Tuesday after gains in the past two sessions, but held near a

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one-week high as markets maintained expectations Budapest can

unlock some EU funds in the coming weeks.

Concerns over European Union funds have been one of the big

risks for the forint this year while Hungary and the EU

executive have been locked in rule-of-law disputes.

A deal on funds is required for a significant strengthening

of the forint, traders and analysts have said. The currency is

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central Europe’s worst performer so far this year and has shed

almost 10%.

The forint had eased 0.2% to 407.20 to the euro by

mid-morning on Tuesday, but it has gained around 2% since

trading beyond 415 last week.

“The forint could continue to be mostly affected by reports

about the negotiations on EU funds,” analysts at Takarekbank

wrote.

The European Commission is likely to approve Hungary’s

post-pandemic recovery plan this week to keep open the

possibility of EU disbursements later, but hold back any payouts

until Budapest fulfills all agreed conditions, sources have said.

On Tuesday, Hungary’s minister in the negotiations, Tibor

Navracsics, said the government expected its recovery fund plan

to be approved by EU finance ministers on Dec. 12. He also said

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he expected the Commission to recommend EU governments suspend

65% of transfers from the EU budget to Hungary, equating to

about 7.5 billion euros.

The forint was followed lower by the Polish zloty, which

also dropped 0.2%. The Czech crown and Romanian leu were little

moved.

Stock markets in Prague and Warsaw fell 1.3% and 0.5%,

respectively, and failed to get a boost from better global

sentiment that was lifted by hopes of looser COVID pandemic

measures in global economic powerhouse China.

Czech lender Komercni Banka traded for the first

time without a right to a special dividend, prompting a more

than 6% drop and weighing heavy in Prague.

CEE SNAPSHO AT

MARKETS T 1051

CET

CURRENC

IES

Latest Previou Daily Change

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s

bid close change in 2022

EURCZK Czech

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 2022

.PX Prague 1219.52 1235.44 -1.29% n/a

00

.BUX Budapest 45973.4 45588.7 +0.84% -9.36%

8 4

.WIG20 Warsaw <.wig20>

.BETI Buchares 11597.7 11530.2 +0.59% -11.21%

t 9 1

.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 Jason Hovet in Prague, Anita Komuves in Budapest,

and Alan Charlish in Warsaw; Editing by Kirsten Donovan)