Sunday, May 22

FX drift, hold off lows as Ukraine stays in focus


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PRAGUE — Central European currencies

mostly drifted lower on Friday but held well off lows hit at the

beginning of the week, while stocks gained some ground even as

investors remained focused on the war in Ukraine and risks to

regional growth.

European Union leaders were holding a summit at France’s

Versailles Palace, with talks expected to be dominated by calls

for more action to punish Russia for its invasion, assist

Ukraine and cope with an influx of nearly 2.5 million refugees

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in just two weeks.

Central Europe has been hit hard by a global flight to safer

assets following Russia’s invasion of Ukraine on Feb. 24, which

prompted a raft of harsh Western sanctions against Moscow.

The Hungarian forint and Polish zloty fell to record lows on

Monday amid a global sell-off.

The slide in currencies has already prompted the Czech and

Polish central banks to step into markets last week while

Hungary’s policymakers have lifted interest rates.

The Hungarian central bank (NBH) raised its one-week deposit

rate by 50 basis points to 5.85% at a weekly tender on Thursday,

extending its rate tightening campaign.

“With geopolitical risks still dominating FX and commodity

prices moves, we think that the NBH will currently continue to

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use the 1-week depo to respond quickly to a deterioration of

risks by raising rates while keeping them on hold when these

subside,” Morgan Stanley analysts said.

The forint was steady on Friday at 380.11 per euro

to the euro at 0936 GMT, off a record low of 400 it hit on

Monday.

The zloty dipped 0.2% to 4.793 per euro, while the

The Czech crown was also little changed at 25.216.

The Czech central bank, which has lifted its base rate to a

20-year high of 4.50%, has been the most aggressive among

central Europe’s policy tightening seen since last year as

inflation soars. The region is expecting still stronger price

pressures coming from the Ukraine conflict.

Czech inflation could accelerate by 1-2 percentage points

from the 11.1% reported for February, central bank Governor Jiri

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Rusnok said late on Thursday. He said a further moderate rise in

rates could not be ruled out.

CEE SNAPSHO AT

MARKETS T 1036

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: calcula 1800

daily ted CET

change from

STOCKS

Latest Preview Daily Change

s

close change in 2022

.PX Prague 1289.73 1284.10 +0.44%

00

.BUX Budapest 42704.8 42028.3 +1.61% -15.80%

7 3

.WIG20 Warsaw <.wig20>

.BETI Buchares 11970.0 11921.8 +0.40% -8.35%

t 6 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 Jason Hovet in Prague and Anita Komuves in

Budapest; Editing by Kim Coghill)

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