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Forint edges up before likely pause in Hungarian rate cuts



<html xmlns="http://www.w3.org/1999/xhtml"><head><title>CEE MARKETS-Forint edges up before likely pause in Hungarian rate cuts</title></head><body>

By Anita Komuves

BUDAPEST, Oct 22 (Reuters) -Central European currencies recouped some losses on Tuesday, putting the forint on stronger ground before a widely expected pause in the Hungarian central bank's policy easing.

A Reuters poll showed analysts expect Hungary's central bank to keep its rate HUINT=ECI at 6.50%, halting cuts for now despite inflation falling to its 3% target for the first time since 2021.

The forint, central Europe's worst performing currency so far in 2024, has weakened sharply in recent weeks, raising speculation of a rebound in price growth and shifting expectations to a pause in rate cuts.

The forint EURHUF= was up 0.2% on the day on Tuesday, at 400.95 versus the euro. It has lost nearly 4.5% since the start of the year.

"The main question for today is how long the pause in the cutting cycle is ... Despite the market already being on the hawkish side, (the bank) will not have an easy job today and communication will be key," ING analysts wrote in a note.

"However, we believe the central bank is aware of the fragile situation and therefore the HUF could see some gains today, but it is probably too early for any significant recovery and every gain could be short-lived," they said.

The forint fell beyond the psychological 400-per-euro level this month for the first time since March 2023.

Central Bank Deputy Governor Barnabas Virag said last week that the bank may pause rate cuts this month - and for longer if warranted by external risks and the inflation outlook.

In Poland, the zloty EURPLN= added 0.1% on the day to 4.3135 per euro, recovering some losses from the previous session. The Czech crown EURCZK= was little moved at 25.268.

Central European currencies have recently come under pressure from uncertainties over the upcoming U.S. presidential election, with chances of a Donald Trump victory helping the U.S. dollar and weighing on the region's assets, analysts say.

On Tuesday, the dollar clung to a 2-1/2 month high on expectations the U.S. Federal Reserve will take a measured approach to rate cuts.

"The crown is staying in a lightly defensive position," CSOB bank said. "In the coming sessions, we do not expect any significant improvement (as) nervousness before U.S. elections will be evident in risk assets sensitive to a rise in U.S. market rates."



CEE MARKETS

SNAPSHOT

AT 1021 CET






CURRENCIES







Latest

Previous

Daily

Change




trade

close

change

in 2024

EURCZK=

Czech crown

EURCZK=

25.2680

25.2700

+0.01%

-2.24%

EURHUF=

Hungary forint

EURHUF=

400.9500

401.8500

+0.22%

-4.43%

EURPLN=

Polish zloty

EURPLN=

4.3135

4.3190

+0.13%

+0.72%

EURRON=

Romanian leu

EURRON=

4.9735

4.9735

+0.00%

+0.02%

EURRSD=

Serbian dinar

EURRSD=

117.0300

117.0400

+0.01%

+0.18%


Note: daily change

calculated from


1800 CET












Latest

Previous

Daily

Change





close

change

in 2024

.PX

Prague

.PX

1625.74

1627.5200

-0.11%

+14.97%

.BUX

Budapest

.BUX

74307.67

73990.26

+0.43%

+22.58%

.WIG20

Warsaw

.WIG20

2263.61

2278.75

-0.66%

-3.39%

.BETI

Bucharest

.BETI

17441.57

17441.39

+0.00%

+13.47%













Spread

Daily






vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

3.4990

0.0330

+130bps

+2bps

CZ5YT=RR

5-year

CZ5YT=RR

3.8080

0.1760

+167bps

+14bps

CZ10YT=RR

10-year

CZ10YT=RR

4.0450

0.0630

+173bps

+3bps


Poland






PL2YT=RR

2-year

PL2YT=RR

5.0430

0.0060

+285bps

-1bps

PL5YT=RR

5-year

PL5YT=RR

5.4520

0.0470

+331bps

+1bps

PL10YT=RR

10-year

PL10YT=RR

5.7590

0.0720

+344bps

+4bps










FORWARD RATE AGREEMENTS







3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

3.81

3.53

3.34

4.12


Hungary

HUFFRABUBOR=

6.87

6.77

6.67

6.38


Poland

PLNFRAWIBOR=

5.80

5.44

5.03

5.85


Note: FRA quotes

are for ask prices





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






Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Mark Potter

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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