CEE MARKETS-Crown weakens, Prague index hits 5-1/2 month high

PRAGUE, Nov 1 (Reuters) – The crown eased on Wednesday and hovered off 15-month lows before a Czech National Bank meeting on Thursday that may mark a shift to monetary policy easing, while other central European currencies traded sideways with local markets closed for a holiday.

Hungarian and Polish markets were shut for a national holiday on Wednesday, leaving attention on the crown.

On stock markets, Prague’s PX index .PX touched a 5-1/2 month high, continuing a rally after Vienna- and Prague-listed Austrian lender ErsteERST.VIERST.PR reported a profit surge this week.

CEZ CEZP.PR shares were up 0.4% and just below the psychological 1,000 crown level. A Czech parliamentary committee was set on Wednesday to debate proposed legislation that critics say would disadvantage minority investors during company splits and allow the government to easily break up the majority state-owned utility.

Ahead of a Czech central bank meeting on Thursday, markets are betting rate setters could follow peers in Hungary and Poland by delivering its first interest rate cut following sharp policy tightening in 2021-2022 to battle soaring inflation.

With price growth still high but easing closer to target, analysts expect Czech interest rates to fall this year but are split on whether it will happen on Thursday or at a December meeting.

CSOB said the crown EURCZK=, which was trading a third of a percent lower at 24.647 per euro at 0930 GMT, could face some volatility before the rate decision.

AD

“Even before that it will watch today’s (U.S. Federal Reserve) meeting,” it said.

Fed and European Central Bank hawkishness has been a drag on central Europe’s currencies.

Czech central bank Governor Ales Michl said in mid-October that monetary policy had worked so far and it was time to “slowly and thoughtfully move on”. But he added the CNB would also remain hawkish to fight any renewed inflation whether it eases this year or not.

Hungary has been easing policy since May but slowed its pace last week, while Polish inflation data showing easing price growth reinforced expectations the central bank there would cut once more this year.

Romania’s central bank will hold its last rate-setting meeting of the year on Nov. 8 and is expected to keep its benchmark interest rate on hold at 7.0% as analysts see a shift to easier policy coming later than central European peers.

The leu EURRON= was steady at 4.968 to the euro, within a range it has been in since September.

Hungary’s forint EURHUF= and the Polish zloty EURPLN= also were steady on the day.

CEE MARKETS

SNAPSHOT

AT 1030 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2023

EURCZK=

Czech crown

EURCZK=

24.6470

24.5650

-0.33%

-1.98%

EURHUF=

Hungary forint

EURHUF=

382.6500

382.3500

-0.08%

+4.39%

EURPLN=

Polish zloty

EURPLN=

4.4575

4.4565

-0.02%

+5.21%

EURRON=

Romanian leu

EURRON=

4.9684

4.9680

-0.01%

-0.52%

EURRSD=

Serbian dinar

EURRSD=

117.0800

117.1800

+0.09%

+0.19%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2023

.PX

Prague

.PX

1373.42

1366.4600

+0.51%

+14.29%

.BUX

Budapest

.BUX

56035.15

56035.15

+0.00%

+27.95%

.WIG20

Warsaw

.WIG20

2149.73

2149.73

+0.00%

+19.96%

.BETI

Bucharest

.BETI

14219.08

14218.42

+0.00%

+21.91%

Spread

Daily

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

4.6960

-0.3160

+161bps

-33bps

CZ5YT=RR

5-year

CZ5YT=RR

4.3820

-0.0060

+171bps

-3bps

CZ10YT=RR

10-year

CZ10YT=RR

4.6570

-0.0010

+182bps

-3bps

Poland

PL2YT=RR

2-year

PL2YT=RR

5.1950

0.0130

+211bps

+0bps

PL5YT=RR

5-year

PL5YT=RR

5.3100

-0.0020

+264bps

-2bps

PL10YT=RR

10-year

PL10YT=RR

5.6650

-0.0040

+283bps

-3bps

FORWARD

3×6

6×9

9×12

3M interbank

Czech Rep

CZKFRAPRIBOR=

6.35

5.35

4.41

7.02

Hungary

HUFFRABUBOR=

10.05

8.73

7.94

11.40

Poland

PLNFRAWIBOR=

5.32

4.92

4.64

5.66\

Source

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