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Forint holds tight before renewed rate cuts, crown tests one-month low



<html xmlns="http://www.w3.org/1999/xhtml"><head><title>CEE MARKETS-Forint holds tight before renewed rate cuts, crown tests one-month low</title></head><body>

By Anita Komuves

BUDAPEST, Sept 24 (Reuters) -The forint pulled back slightly on Tuesday to retreat further from a more than one-week high hit last week, with Hungary's central bank debating renewed interest rate cuts, while the crown also eased before another expected Czech rate reduction.

The Hungarian currency EURHUF= eased 0.3%, to 394.90 to the euro, returning to the middle of the range it has bounced around in the second half of the year.

The forint had firmed the past few weeks, to as strong as 392.90, before its retreat. Analysts and traders saw little scope for more weakening, barring any surprises from the central bank.

A Reuters poll of analysts expects the National Bank of Hungary (NBH) to cut its base rate by another 25 basis points (bps) to 6.50% on Tuesday. The bank had held steady on rates last month following 15 consecutive rate reductions.

"The forint is testing the 395-level ... the 25-bps-cut is taken for granted by most of the market, but there is always some movement in the forint's rate before the decision, this is normal," an FX trader in Budapest said.

"The cut has been priced in already, so that will most likely not move the forint's rate."

The Czech crown EURCZK= was testing a one-month low on Tuesday, edging down 0.1% and trading at 25.133 per euro before a central bank meeting on Wednesday at which markets widely expect another 25-bps interest rate cut.

Some analysts have said the crown might get a lift after the expected rate cut if the central bank sounds a hawkish tone, causing markets to scale back rate cut bets going ahead.

Both banks, which started reducing rates already last year, are convening after the U.S. Federal Reserve began its easing cycle last week with a larger than usual rate cut. The European Central Bank has also cut interest rates in recent months.

Elsewhere, the Polish zloty EURPLN= was up 0.11% and trading at 4.2680 versus the euro, at the stronger end of the range where it has been trading since mid-August.

"We expect calm performance from the złoty. EURPLN will probably remain in the range of 4.27-4.28," Polish state-owned development bank BGK wrote.

Stocks in the region firmed, with Warsaw .WIG20 leading gains as it added 1.82%.





CEE MARKETS

SNAPSHOT

AT 1033 CET






CURRENCIES







Latest

Previous

Daily

Change




trade

close

change

in 2024

EURCZK=

Czech crown

EURCZK=

25.1330

25.1300

-0.01%

-1.72%

EURHUF=

Hungary forint

EURHUF=

394.9000

394.8000

-0.03%

-2.97%

EURPLN=

Polish zloty

EURPLN=

4.2680

4.2725

+0.11%

+1.79%

EURRON=

Romanian leu

EURRON=

4.9758

4.9750

-0.02%

-0.03%

EURRSD=

Serbian dinar

EURRSD=

117.0100

117.0600

+0.04%

+0.20%


Note: daily change

calculated from


1800 CET












Latest

Previous

Daily

Change





close

change

in 2024

.PX

Prague

.PX

1581.59

1580.9800

+0.04%

+11.85%

.BUX

Budapest

.BUX

73473.66

73060.07

+0.57%

+21.20%

.WIG20

Warsaw

.WIG20

2328.51

2286.81

+1.82%

-0.62%

.BETI

Bucharest

.BETI

17675.30

17601.71

+0.42%

+14.99%













Spread

Daily






vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

3.2350

0.0090

+107bps

+1bps

CZ5YT=RR

5-year

CZ5YT=RR

3.4320

0.0260

+140bps

+1bps

CZ10YT=RR

10-year

CZ10YT=RR

3.7450

0.0050

+155bps

-2bps


Poland






PL2YT=RR

2-year

PL2YT=RR

4.6950

-0.0040

+253bps

+0bps

PL5YT=RR

5-year

PL5YT=RR

5.0970

0.0400

+307bps

+3bps

PL10YT=RR

10-year

PL10YT=RR

5.4330

0.0390

+324bps

+2bps










FORWARD RATE AGREEMENTS







3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

3.71

3.42

3.11

4.29


Hungary

HUFFRABUBOR=

6.43

6.07

5.66

6.43


Poland

PLNFRAWIBOR=

5.75

5.39

4.76

5.85


Note: FRA quotes

are for ask prices





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





Additional reporting by Jason Hovet in Prague and Karol Badohal in Warsaw; Editing by Kim Coghill

For related news and prices, click on the codes in brackets: All emerging market news EMRG CEEU CEE/ Spot FX rates Eastern Europe spot FX EEFX= Middle East spot FX MEFX= Asia spot FX ASIAFX= Latin America spot FX LATAMFX= Other news and reports World central bank news CEN Economic Data Guide ECONGUIDE Official rates GLOBAL/INT Emerging Diary EMRG/DIARY Top events M/DIARY Diaries DIARY Diaries Index IND/DIARY
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