Wednesday, October 20

Czech crown holds gains on rate hike bets as FX move sideways


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WARSAW — Central European currencies

largely drifted weaker and most stocks sagged on Friday, with

global sentiment weak, although the Czech crown held near a more

than 1-1/2 year high on bets the central bank could speed up

rate hikes.

The crown hit its highest since February 2020 – when the

COVID-19 pandemic first started rattling markets – on Thursday

after data showed a jump in producer prices and hawkish comments

from a central banker.

CSOB said comments on Thursday from Czech central bank

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Vice-Governor Marek Mora – who said in an interview with

Bloomberg that odds were moving closer to a stronger 50 basis

point rate hike at the next policy meeting this month – raised

chances the bank could opt for a steeper rate hike.

But the crown would still be caught in global trading moods

until more central bankers possibly comment, it said.

“Markets will be watching the outcome of the US Fed

meeting (next week) and also German elections (in September),”

CSOB said.

The crown was up 0.1% at 25.304 to the euro at

0844 GMT.

The Hungarian forint was steady at 351.170 to the

euro. The Polish zloty was at 4.582 to the euro.

The zloty has lagged peers as Poland’s central bank keeps

policy loose despite inflation hitting a two-decade high.

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Analysts expected the zloty to stabilize, despite

uncertainty over interest rates and the EU’s delay on approving

recovery funds.

“We assume the Polish currency to be stable after the last

two days…but local factors will still have a negative impact,”

Bank Millenium said in a note.

In June, the Czech and Hungarian central banks became the

first in the European Union to raise interest rates to tame

price pressures coming as economies recover from the pandemic.

The Czech bank has debated whether faster rate increases,

something markets are betting on.

In stock markets, central European indices were mixed, with

Prague leading gains at 1306.53 while Warsaw

dropped 0.26% and rising by 0.07% at 0855 GMT.

CEE SNAPSHO AT

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MARKETS T 1044

CET

CURRENC

IES

Latest Previou Daily Change

s

bid close change in 2021

EURCZK Czech

EURHUF Hungary 0 0

EURPLN Polish

EURRON Romanian

EURHRK Croatian

EURRSD Serbian 0 0

Note: calcula 1800

daily ted CET

change from

STOCKS

Latest Previou Daily Change

s

close change in 2021

.PX Prague 1306.18 1301.98 +0.32% +27.17

00%

.BUX Budapest 52345.4 52331.3 +0.03% +24.31

1 1%

.WIG20 Warsaw <.wig20>%

.BETI Buchares 12291.2 12265.2 +0.21% +25.35

t 9 5%

.SBITO Ljubljan <.sbito p a>%

.CRBEX Zagreb <.crbex>%

.BELEX Belgrade <.belex>

.SOFIX Sofia <.sofix>%

BONDS

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

FRA

3×6 6×9 9×12 3M

interba

nk

Czech

Hungary

Poland

Note: FRA quotes

are for ask

prices

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

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

(Reporting by Joanna Plucinska in Warsaw, Jason Hovet in

Prague; Editing by Angus MacSwan)

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