Tuesday, December 6

Forint sinks to record low against euro amid dollar gains


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BUDAPEST/WARSAW — Hungary’s forint

sank to an all-time-low against the euro of 426.45 on

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Monday, pressured by dollar gains and expectations of a rise in

inflation to near 20%.

Central Europe’s worst-performing currency, which is down

13% against the euro this year, traded 0.45% lower at 0757 GMT,

underperforming its regional competitors, most of which were

flat to a touch stronger on the day.

The forint has been pressured by Hungary’s reliance on

Russian energy imports, the strength of the dollar, surging

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inflation and a rule-of-law row with the European Union that has

Hampered access to billions of euros of funding.

“We are bracing for the 20% inflation figure tomorrow,” a

Budapest-based currency dealer said.

Economists polled by Reuters see September inflation at

19.4% after a surge in energy prices forced Budapest to scrap a

years-long cap on household utility bills.

Data on Monday showed a 1.3 billion deficit in Hungary’s

August trade account as surging energy imports are met with a

slowdown in exports to the euro zone, its main trading partner.

The forint would not recover meaningfully until the EU

gives the green light to renewed money flows, the trader said,

if it finds Hungary’s latest reforms sufficient to allay

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long-standing concerns over misuse of funds from the bloc.

“Until that happens, the distrust and lack of confidence in

the forint will not be priced out,” the trader said, adding that

the forint continued to weaken despite gas prices, long a factor

driving its falls, had retreated.

The Polish zloty, meanwhile, eased 0.25% in early

trade, extending weakness since the central bank unexpectedly

paused rate rises last week to assess the impacts of an economic

slowdown on inflation.

“Global investment sentiment remains key, and remains

unfavorable to riskier assets,” Bank Millennium said in a note,

adding that the zloty may breach the weak side of a 4.8 to 4.89

range versus the euro.

The Czech crown, bolstered this year by central

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bank interventions, nudged up to an 8-week high on Monday.

“The Czech crown is holding at relatively strong levels and

resisted the high volatility on global markets last week also

due to CNB interventions,” CSOB analysts said.

The Czech central bank has intervened in markets since May,

spending 2.4 billion euros of reserves in August, down from

almost 10 billion in July, data on Friday showed.

CEE SNAPSHO AT

MARKETS T 0957

CET

CURRENC

IES

Latest Preview Daily Change

s

bid close change in 2022

EURCZK Czech

EURHUF Hungary 0 0

EURPLN Polish

EURRON Romanian

EURHRK Croatian

EURRSD Serbian 0 0

Note: calculated from 1800

daily CET

change

Latest Preview Daily Change

s

close change in 2022

.PX Prague 1161.21 1168.74 -0.64% #VALUE!

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00

.BUX Budapest 39273.7 39537.6 -0.67% -22.57%

7 3

.WIG20 Warsaw <.wig20>

.BETI Buchares 10845.9 10908.7 -0.58% -16.96%

t 1 2

.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 ask

FRA prices

quotes

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

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

(Reporting by Jason Hovet, Anna Wlodarczak-Semczuk and Gergely

Szakacs; Editing by Alexander Smith)

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