Zloty leads FX losses, market eyes no move in Polish rate this week

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BUCHAREST — Central European currencies

were virtually unchanged by the midday session on Monday, though

the Polish zloty eased slightly following central bank comments

that raising interest rates would be risky at this time.

Poland’s central bank Governor Adam Glapinski told state run

news agency PAP in an interview published on Monday, that hiking

rates poses a risk after inflation in emerging Europe’s largest

economy hit a two-decade high in August.

Glapinski has stressed he believes hiking too soon could

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jeopardize the economic recovery from the COVID-19 pandemic.

Poland’s central bank will hold a rate-setting meeting on

Wednesday. All of the analysts polled by Reuters expect the main

rate to stay unchanged at 0.1%.

“I think last week the market got a little bit over-excited

with the CPI,” said a Warsaw-based currency trader. “This was

like a little cold shower,” the trader said, referring to

Glapinski’s comments.

“It’s a signal we might have some disappointment and if we

have some disappointment those positions established last week

might be short covered and then the zloty might weaken further.”

By 0910 GMT, the zloty was trading 0.16% down on the day at

4.5157 to the euro, having broken the 4.5000 psychological level

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last Wednesday, after the highest inflation reading in two

decades raised expectations that rates would rise before the end

of the year.

The Czech crown was flat at 25.36 while the

Hungarian forint firmed 0.05% to 347.25, trading at a

two-and-a-half month high, with the latter supported by a rate

hike cycle begun in June.

“On Friday the euro-forint rate went below 348 which was an

important short-term support, the next level is near 347,”

brokerage Equilor wrote in a note.

The leu traded close to record lows of 4.9460, as

the centrist coalition government could face a parliamentary

vote of no-confidence in coming days.

Stocks were up, with the main index in Budapest

rising 0.43% and scaling another record high. Shares of OTP Bank

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added 0.75% by 0824 GMT and also reached a record

high.

Warsaw’s WIG20 index was up 0.53%. Prague and

Bucharest were 0.12% down and 0.07% up respectively.

CEE SNAPSHOT AT 1110

MARKETS CET

CURRENCIES

Latest Previous Daily Change

bid close change in 2021

Czech 25.3600 25.3700 +0.04% +3.43%

crown

Hungary 347.3700 347.4300 +0.02% +4.42%

forint

Polish 4.5146 4.5086 -0.13% +0.99%

zloty

Romanian 4.9460 4.9445 -0.03% -1.64%

leu

Croatian 7.4920 7.4965 +0.06% +0.74%

kuna

Serbian 117.5700 117.6050 +0.03% +0.00%

dinar

Note: calculated from 1800

daily CET

change

Latest Previous Daily Change

close change in 2021

Prague 1292.09 1293.6200 -0.12% +25.79

%

Budapest 52480.99 52255.11 +0.43% +24.64

%

Warsaw 2393.38 2380.82 +0.53% +20.64

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%

Bucharest 12322.42 12313.36 +0.07% +25.67

%

Ljubljana 1200.24 1202.75 -0.21% +33.23

%

Zagreb 1967.02 1965.37 +0.08% +13.09

%

Belgrade 801.60 808.73 -0.88% +7.08%

Sofia 560.71 560.71 +0.00% +25.29

%

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republic

2-year 1.6740 -0.0030 +239bp +0bps

s

5-year 1.7780 0.0010 +244bp +0bps

s

10-year s

Poland

2-year 0.4820 -0.1150 +120bp -11bps

s

5-year 1.2860 -0.0790 +195bp -8bps

s

10-year s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech Rep

Hungary

Poland

Note: FRA are for ask prices

quotes

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

********

(Additional reporting by Anita Komuves in Budapest and Alan

Charlish in Warsaw; Editing by Simon Cameron-Moore)

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