Forint bears the brunt as FX fall under pressure



PRAGUE, June 23 (Reuters) - Hungary's forint lost 0.7% on Thursday as central Europe's currencies fell under more pressure and shares in the region sagged as investor sentiment soured, amid global recession worries and aggressive U.S. rate hikes.

The forint was the main mover, coming after Hungary's central bank kept its one-week deposit rate unchanged at a weekly tender on Thursday. Last week, the bank had unexpectedly raised the rate by 50 basis points amid a tightening drive.

Central European rate setters have maintained sharp policy tightening since last year to tackle surging inflation, but with major global central banks now becoming more hawkish, currencies in the region are under pressure.

The Czech central bank delivered one of its biggest hikes – by 125 basis points – of a year-long tightening campaign on Wednesday, although many see the likelihood it could be the last as the board is revamped from July under a new governor who has opposed more rate hikes.

The crown EURCZK= , though, was steady on Thursday around 24.74 to the euro. On Wednesday, outgoing central bank Governor Jiri Rusnok said the bank's mandate for currency interventions remained in place to prevent undesired weakening, which would raise inflation pressures.

"While the near-term policy prospects are overshadowed by changes to the board, we think that underlying inflation dynamics and the broader macroeconomic backdrop will continue exerting pressures for further policy tightening this year," Goldman Sachs analysts said.

The forint EURHUF= fell to 398.9 to the euro in morning trading, creeping back toward a record low of 403 hit this month. It has lost the most in the region this year, worse off as the country faces a high budget deficit, a row with the EU over recovery funds, the introduction of windfall taxes on banks and certain companies, and a negative real interest rate.

The Polish zloty EURPLN= slipped 0.2% to a one-week low. On stock markets, Warsaw .WIG20 led losses, falling 1.1%.

Czech utility CEZ CEZP.PR shares fell 0.4% with the wider market, despite Prime Minister Petr Fiala saying in a televised address to the nation on Wednesday evening the state wanted to have the country's network of key domestic power plants under control.

The state already holds 70% of CEZ and has signalled talks on a future restructuring of the utility were underway.

"A possible buyout would probably be based on an independent valuation of individual parts of the company, which would reflect the current high electricity prices," J&T Banka said.

"In our opinion, the current share price still does not fully reflect the impact of electricity prices on the company's performance and we assume that the mentioned valuation would be higher than the current share price on the market."

CEE

SNAPSHO AT

MARKETS T

0957

CET

CURRENC

IES

Latest Previou Daily

Change

s

bid

close

change in 2022 EURCZK Czech

<EURCZK 24.7380 24.7300 -0.03% +0.54% =

crown

=>

EURHUF Hungary <EURHUF 398.900 396.200 -0.68% -7.40% =

forint

=>

0

0

EURPLN Polish

<EURPLN 4.7065 4.6960 -0.22% -2.45% =

zloty

=>

EURRON Romanian <EURRON 4.9470 4.9465 -0.01% +0.02% =

leu

=>

EURHRK Croatian <EURHRK 7.5230 7.5195 -0.05% -0.07% =

kuna

=>

EURRSD Serbian <EURRSD 117.320 117.410 +0.08% +0.22% =

dinar

=>

0

0

Note:

calcula

1800

daily

ted

CET

change

from

Latest Previou Daily

Change

s

close

change in 2022 .PX

Prague

.PX

1301.64 1307.59 -0.46% #VALUE!

00

.BUX

Budapest .BUX

39698.7 40035.7 -0.84% -21.73%

5

2

.WIG20 Warsaw

<.WIG20 1661.53 1680.61 -1.14% -26.71%

>

.BETI Buchares .BETI 12320.8 12300.7 +0.16% -5.67%

t

0

2

.SBITO Ljubljan <.SBITO 1135.35 1130.33 +0.44% -9.57% P

a

P>

.CRBEX Zagreb

<.CRBEX 1996.38 2006.36 -0.50% -3.99%

>

.BELEX Belgrade <.BELEX 830.21 831.67 -0.18% +1.15% 15

15>

.SOFIX Sofia

<.SOFIX 606.78 611.79 -0.82% -4.55%

>

Yield

Yield

Spread Daily

(bid)

change vs Bund change

in

Czech

spread

Republic

CZ2YT=

2-year <CZ2YT= 6.4250 -0.0150 +554bp +13bps RR

RR>

s CZ5YT=

5-year <CZ5YT= 5.8250 -0.0310 +459bp +14bps RR

RR>

s CZ10YT

<CZ10YT 5.4290 0.0030 +394bp +13bps =RR

10-year =RR>

s

Poland

PL2YT=

2-year <PL2YT= 7.5870 -0.1420 +670bp

+1bps RR

RR>

s PL5YT=

5-year <PL5YT= 7.5180 -0.1170 +628bp

+5bps RR

RR>

s PL10YT

<PL10YT 7.0840 -0.1260 +559bp

+0bps =RR

10-year =RR>

s

FORWARD

3x6

6x9

9x12

3M

interba

nk

Czech

<CZKFRA

7.50

7.56

7.40

6.67

Rep

><PRIBO

R=>

Hungary <HUFFRA

9.23

9.77

9.73

7.67

><BUBOR

=>

Poland

<PLNFRA

7.90

8.07

8.06

6.97

><WIBOR

=>

Note:

are for

FRA

ask

quotes

prices

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

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


Reporting by Jason Hovet in Prague and Anita Komuves in Budapest; Editing by Shailesh Kuber

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