Tuesday, July 5

Polish zloty firms on rate hike expectations


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BUDAPEST — Central European currencies

firmed in low liquidity on Monday as US markets were closed

for a holiday, with the Polish zloty outperforming the region

supported by the possibility of sooner-than-expected monetary

policy tightening in Poland.

The zloty was up 0.23%, trading at 4.5070 versus

the euro common currency.

“Liquidity is so low that it can cause bigger jumps in the

rate,” an FX trader in Warsaw said. “The zloty is also supported

by the central bank governor who on Friday, for the first time,

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did not exclude the possibility of rate hikes.”

Governor Adam Glapinski was quoted in an interview as saying

that “if there are any reasons, for example when inflation is

driven by demand factors, and strong economic growth continues,

we will raise rates.”

Rate hikes in Hungary and the Czech Republic in June fueled

anticipation of sooner-than-expected tightening in Poland as

well, which buoyed the zloty in the past two weeks.

Central banks in Poland and Romania will announce rate

decisions on Thursday, and Glapinski will hold a news conference

on Friday at 1300 GMT.

The Romanian leu edged up 0.04% to 4.9270.

Investors were also eyeing June CPI data in Hungary to be

published on Thursday.

“If inflation comes in higher than expected, that can

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strengthen rate hike expectations and could support the

currency,” an FX trader in Budapest said.

Central bank deputy governor Barnabas Virag reiterated on

Monday that the National Bank of Hungary would act decisively

and the fastest way possible to counter inflation risks.

Headline inflation came in at an annual 5.1% in May, below

forecasts but above the central bank’s target range of 3% with a

tolerance band of a percentage point on either side.

The Hungarian forint slid 0.05% on Monday and was

trading at 351.69.

Markets in the Czech Republic were closed for a national

holiday on Monday and Tuesday.

Stocks in the region were higher, with Warsaw up

0.33% while Budapest gained 0.24%. Bucharest was

0.43% higher.

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CEE SNAPSHO AT

MARKETS T 1115 CET

CURRENC

IES

Latest Previous Daily Change

bid close change in 2021

EURCZK = Czech

EURHUF= Hungary 0

EURPLN= Polish

EURRON= Romania

EURHRK= Croatia

EURRSD= Serbian 0

Note: calculated from 1800

daily CET

change

Latest Previous Daily Change

close change in 2021

.PX Prague 1152.13 1152.130 +0.00% +12.17

0%

.BUX Budapes 47633.9 47520.42 +0.24% +13.12

t 1%

.WIG20 Warsaw 2259.50 2252.18 +0.33% +13.89

%

.BETI Buchare 11881.8 11830.90 +0.43% +21.17

st 4%

.SBITOP Ljublja <.sbitop na>%

.CRBEX Zagreb 1963.36 1970.32 -0.35% +12.88

%

.BELEX1 Belgrad <.belex1 e>

.SOFIX Sofia 544.12 550.76 -1.21% +21.58

%

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republi

c

CZ2YT=R s

CZ5YT=R s

CZ10YT= s

Poland

PL2YT=R s

PL5YT=R s

PL10YT= s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech 1.03 1.33 1.63 0.66

Rep

Hungary 1.51 1.86 2.03 1.05

Poland 0.31 0.54 0.77 0.21

Note: are for ask

FRA prices

quotes

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

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

(Editing by Mark Heinrich)

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