Zloty weakens after smaller-than-expected rate hike; forint rebounds



(Updates with Polish cenbank decision, analyst comment, Hungary cenbank announcement, market moves)

By Anita Komuves

BUDAPEST, July 7 (Reuters) - The Polish zloty eased on Thursday as the country's central bank raised interest rates below expectations, while the Hungarian forint jumped after a hefty rate hike and news of progress in talks with the European Commission on pandemic recovery funds.

The zloty weakened, giving up earlier gains after the central bank raised its main interest rate by 50 basis points to 6.50% as the bank faces both the threat of an economic slowdown and surging inflation.

A Reuters poll of analysts expected a 75-basis-point hike while some saw a chance for an even bigger step as the zloty has been recently weakened by a global risk-off mood and a firming dollar.

The zloty was down 0.1% and trading at 4.8030 per euro by 1420 GMT.

"We expect only a few more hikes in the coming months, taking rates to a peak of 7.50% (previously 7.75%)," wrote Liam Peach of Capital Economics.

"The decision to slow tightening comes after recent comments from Governor (Adam) Glapinski in which he said that the tightening cycle is nearing an end, even though inflation has continued to increase."

The Hungarian forint EURHUF= rebounded from levels near its record low after the central bank raised its one-week deposit rate by 200 bps to 9.75% and said that the fast closing of the gap between the base rate and the one-week deposit rate will be discussed at the Monetary Council's next meeting on July 12.

The bank uses the one-week rate to tackle short-term market volatility.

The currency was up 1.23% and trading at 406.75 per euro in the afternoon, off a historic low of 416.90 hit in the previous session.

The forint was also helped by comments from a top aide to Prime Minister Viktor Orban who said that the government is committed to reaching its budget deficit targets this year and next.

He also said that the government aims to close talks with the European Commission about the release of EU funds as soon as possible and that talks have progressed as Hungary made concessions on four issues.

The forint, the worst performer in central Europe so far this year, has been pressured by a lack of agreement with the EU, a twin deficit, soaring inflation and a series of windfall taxes, traders and analysts have said.

CEE

SNAPSH AT

MARKETS OT

1620

CET

CURREN

CIES

Latest Previo Daily Change

us

bid

close change in

2022 EURCZK Czech

<EURCZK 24.767 24.783 +0.06 +0.42 =

crown

=>

0

0

%

% EURHUF Hungary <EURHUF 406.75 411.75 +1.23 -9.19% =

forint =>

00

00

% EURPLN Polish <EURPLN 4.8030 4.7980 -0.10% -4.41% =

zloty

=>

EURRON Romania <EURRON 4.9430 4.9426 -0.01% +0.11 =

n leu

=>

% EURHRK Croatia <EURHRK 7.5160 7.5205 +0.06 +0.02 =

n kuna =>

%

% EURRSD Serbian <EURRSD 117.35 117.40 +0.04 +0.20 =

dinar

=>

00

00

%

%

Note:

calculated from

1800

daily

CET

change

Latest Previo Daily Change

us

close change in

2022 .PX

Prague

.PX

1221.7 1212.5 +0.75

4

900

% .BUX

Budapes .BUX

39958. 39352. +1.54 -21.22

t

01

08

%

% .WIG20 Warsaw <.WIG20 1706.3 1654.8 +3.11 -24.73

>

8

4

%

% .BETI Buchare .BETI 12314. 12286. +0.23 -5.72%

st

16

03

% .SBITO Ljublja <.SBITO 1125.6 1117.2 +0.75 -10.34 P

na

P>

3

4

%

% .CRBEX Zagreb <.CRBEX 1993.2 1995.5 -0.12% -4.14%

>

5

5

.BELEX Belgrad <.BELEX 841.77 844.08 -0.27% +2.56 15

e

15>

% .SOFIX Sofia

<.SOFIX 610.96 612.33 -0.22% -3.89%

>

Yield Yield Spread Daily

(bid) change vs

change

Bund

in

Czech

spread

Republi

c

CZ2YT=

<CZ2YT= 6.2070 -0.022 +570b -15bps RR

2-year RR>

0

ps CZ5YT=

<CZ5YT= 5.2320 -0.112 +430b -23bps RR

5-year RR>

0

ps CZ10YT

<CZ10YT 4.7160 0.1410 +343b +7bps =RR

10-year =RR>

ps

Poland

PL2YT=

<PL2YT= 7.9630 0.0210 +746b -11bps RR

2-year RR>

ps PL5YT=

<PL5YT= 7.2570 0.0810 +633b -3bps RR

5-year RR>

ps PL10YT

<PL10YT 6.7340 0.0180 +545b -6bps =RR

10-year =RR>

ps

FORWARD

3x6

6x9

9x12

3M

interb

ank

Czech

<CZKFRA

7.62

7.58

6.99

7.23

Rep

><PRIBO

R=>

Hungary <HUFFRA 13.18 13.36 13.33 10.59

><BUBOR

=>

Poland <PLNFRA

8.07

8.06

7.90

7.12

><WIBOR

=>

Note:

are for ask

FRA

prices

quotes

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

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


Additional reporting by Pawel Florkiewicz in Warsaw, Editing by Angus MacSwan and Maju Samuel

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