Crown stable as markets expect another hefty rate hike



By Anita Komuves

BUDAPEST, June 22 (Reuters) - Most central European currencies were steady on Wednesday ahead of a meeting of the Czech National Bank where policymakers are widely expected to deliver another hefty rate hike in an attempt to curb rapid inflation.

The crown EURCZK= edged 0.03% lower to 24.697 per euro ahead of the meeting where a Reuters poll of analysts expect a 100-basis-point or 125-basis-point hike in the key two-week repo rate, now at 5.75%.

The expectation of a large rate hike was one of the "reasons why EUR-CZK has remained steadier than other peer currencies over the past month," Commerzbank wrote in a note.

"But since it is priced-in, we would not expect further exchange rate appreciation from this outcome."

The crown has been the best performer among its CEE peers so far this year as it has added more than 0.7% since the beginning of 2022.

This will be the last meeting of the CNB before incoming governor Ales Michl takes over. Michl has consistently voted against rate hikes during the central bank's year-long tightening cycle, which has raised the main rate by a total of 550 basis points.

However, his promise of no more rate hikes will be tested right away by soaring inflation and a hawkish turn among major central banks.

Elsewhere, the Hungarian forint EURHUF= edged up 0.1% to 394.00 per euro, while the Polish zloty EURPLN= slid 0.35% to trade at 4.6535 versus the common currency.

"Today, a regional source of volatility may be the meeting of the Czech central bank," Bank Millennium wrote.

"Locally, this may also be a source of additional pressure on the Polish Monetary Policy Council, but we do not believe that it is so strong that it could significantly affect the valuation of Polish assets."

Stocks in the central European region slid, tracking European peers lower, resuming a sell-off that had hammered global stocks last week.

Warsaw's index .WIG20 was down 2.33% while Budapest .BUX weakened 1.7%. Prague .PX shed 0.93% while Bucharest .BETI eased 0.3%.

CEE

SNAPSHOT

AT

MARKETS

1003 CET

CURRENCIES

Latest

Previous Daily Change

bid

close

change in

2022 Czech

EURCZK=

24.6970 24.6900 -0.03% +0.71 crown

% Hungary

EURHUF=

394.0000 394.4000 +0.10 -6.25% forint

% Polish

EURPLN=

4.6535

4.6370 -0.35% -1.34% zloty

Romanian

EURRON=

4.9470

4.9455 -0.03% +0.02 leu

% Croatian

EURHRK=

7.5170

7.5195 +0.03 +0.01 kuna

%

% Serbian

EURRSD=

117.3400 117.4500 +0.09 +0.20 dinar

%

% Note:

calculated from

1800

daily

CET

change

Latest

Previous Daily Change

close

change in

2022 Prague

.PX

1306.51 1318.770 -0.93%

0

Budapest

.BUX

40241.32 40936.77 -1.70% -20.66

% Warsaw

.WIG20

1678.92 1719.05 -2.33% -25.94

% Bucharest .BETI

12339.46 12377.09 -0.30% -5.53% Ljubljana .SBITOP

1131.05 1137.52 -0.57% -9.91% Zagreb

.CRBEX

2006.36 2006.36 +0.00 -3.51%

% Belgrade

.BELEX15

827.41

832.97 -0.67% +0.81

% Sofia

.SOFIX

614.79

616.25 -0.24% -3.29%

Yield

Yield

Spread Daily

(bid)

change

vs

change

Bund

in Czech

spread Republic

2-year

CZ2YT=RR

6.6710 -0.0050 +560b +6bps

ps 5-year

CZ5YT=RR

6.1210 -0.0380 +466b +4bps

ps 10-year <CZ10YT=RR

5.7360 -0.0320 +404b +4bps

>

ps Poland

2-year

PL2YT=RR

7.9270 -0.1400 +686b -7bps

ps 5-year

PL5YT=RR

7.9200 -0.1800 +646b -10bps

ps 10-year <PL10YT=RR

7.4830 -0.2460 +579b -17bps

>

ps

FORWARD

3x6

6x9

9x12

3M

interb

ank Czech Rep CZKFRA <P

7.66

7.79

7.73

6.60

RIBOR=>

Hungary

HUFFRA <B

9.40

10.01 10.07

7.66

UBOR=>

Poland

PLNFRA <W

8.18

8.35

8.33

6.94

IBOR=>

Note: FRA are for ask prices

quotes

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

*********


Additional reporting by Pawel Florkiewicz in Warsaw; Editing by Sherry Jacob-Phillips

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