CEE MARKETS-FX lower after Fed rate hike, eyes on Czech central bank

By Anita Komuves and Jason Hovet BUDAPEST, Nov 3 (Reuters) – The Hungarian forint led losses in central Europe on Thursday as the U.S. Federal Reserve’s rate hike on Wednesday pressured markets while investors also eyed a policy meeting of the Czech National Bank (CNB) later in the day. The crown was a touch weaker ahead of the CNB decision as analysts expected the policy rate to stay unchanged at 7.00% for a third straight meeting while the bank is expected to continue to deploy forex market interventions to keep the crown from excessive weakening. Pressure on the currency has eased in the past month, and with souring economic indicators most analysts think the bank will avoid further rate hikes before turning to rate cuts, possibly in 2023. Mostly “because of the weakening of the real economy indicators, a hold decision has become much more likely than before,” Commerzbank wrote. The Polish zloty was 0.17% lower and trading at 4.7115 per euro while the Hungarian forint weakened 0.62% to 409.45. The Fed’s 75-basis-point rate hike to 4% on Wednesday strengthened the dollar and put pressure on CEE currencies, traders and analysts said. “Volatility is high, that is why the forint lost the most in the region today,” an FX trader in Budapest said. “But as long as the central bank keeps its most important rate at 18%, it will not significantly ease further.” The central bank introduced a quick deposit tool at an 18% rate in mid-October which helped shore up the forint that fell to a record low at around 434 per euro last month. Long-term Hungarian bond yields were stable ahead of an auction later in the day where the Government Debt Management Agency (AKK) offers three sets of bonds worth a total of 30 billion forints ($71.45 million). “This is a small amount, and I expect a healthy interest at these yields,” a fixed-income trader in Budapest said. “Yields rose about 30 basis points in low liquidity yesterday following last week’s drop, and I expect them to climb further today as the forint is weakening and core market yields are also higher.” The yield on the 10-year benchmark bond was about 10.40%. CEE SNAPSH AT MARKETS OT 1040 CET CURREN CIES Latest Previous Daily Change bid close change in 2022 Czech 0 % Hungary 00 Polish Romania % % Croatia % Serbian 00 % % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2022 Prague 1191.9 1185.420 +0.55 6 0 % Budapes 41370. 41414.05 -0.11% -18.43 t 48 % Warsaw <.WIG20 1553.8 1573.97 -1.28% -31.45 > 9 % Buchare 10858. 10875.83 -0.16% -16.86 st 57 % Ljublja <.SBITO 1013.5 1016.24 -0.26% -19.27 na P> 7 % Zagreb <.CRBEX 1911.4 1914.37 -0.15% -8.07% > 5 Belgrad <.BELEX 783.89 788.17 -0.54% -4.49% e 15> Sofia <.SOFIX 589.56 590.91 -0.23% -7.26% > Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republi c ps ps ps Poland ps s ps s ps s FORWARD 3×6 6×9 9×12 3M interb ank Czech Hungary Poland Note: are for ask FRA prices quotes ****************************************** ******************** ($1 = 419.0800 forints) ($1 = 419.9000 forints) (Reporting by Anita Komuves in Budapest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Krishna Chandra Eluri)