Forint hits record low as markets eye c.bank meeting



By Alan Charlish and Gergely Szakacs

WARSAW, June 27 (Reuters) - The Hungarian forint EURHUF= hit a record low on Monday, ahead of a central bank meeting on Tuesday at which policymakers are expected to stick to a 50-basis-point pace of tightening despite inflation expected to surge to a 24-year high. The forint has been central and eastern Europe's worst performing currency this year, as factors ranging from Hungary's high budget deficit to the introduction of windfall taxes on banks and certain companies have resulted an over 8% fall, complicating the central bank's fight against inflation. The forint hit a record low of 404.5 versus the euro. At 0900 GMT, it was 0.58% weaker on the day at 403.95.

"A 100-basis-point rate increase tomorrow could give the forint some near-term respite, perhaps strengthening it for a couple of hours," said a currency trader in Budapest.

"But we really do not see anything pointing towards the strengthening of the forint. Liquidity is very low, so even a few deals can trigger bigger moves."

Elsewhere in central Europe, currencies drifted slightly, with the Czech crown EURCZK= 0.08% weaker at 24.746, the Polish zloty EURPLN= 0.13% softer at 4.695 and the Romanian leu EURRON= falling 0.07% to 4.9474.

Foreign exchange markets in central and eastern Europe have been under pressure recently due to worries that aggressive monetary policy tightening by major central banks could tip the global economy into recession.

"We have recessionary tendencies in global markets and small, open economies like ours will definitely suffer, so in this environment it is natural for currencies to weaken," said Piotr Bartkiewicz, an economist at Pekao in Warsaw.

Polish bond yields tracked euro zone peers higher, as markets looked ahead to inflation data later in the week. The benchmark 10-year PL10YT=RR yield rose almost 13 basis points to 7.137%

"Sharp declines in yields and swaps from previous sessions came to a sudden halt on Friday," Santander Bank Polska wrote in a note.

"We believe it is quite possible to resume the upward trend this week, especially if it is supported by the hawkish tone of the Sintra conference and higher inflation data in Europe in the following days."

The European Central Bank's annual policy conference in Sintra, Portugal begins on Monday.

CEE

SNAPSHO AT

MARKETS T

1100

CET

CURRENC

IES

Latest Previou Daily

Change

s

bid

close

change in 2022 EURCZK Czech

<EURCZK 24.7460 24.7270 -0.08% +0.51% =

crown

=>

EURHUF Hungary <EURHUF 403.950 401.600 -0.58% -8.56% =

forint

=>

0

0

EURPLN Polish

<EURPLN 4.6950 4.6890 -0.13% -2.22% =

zloty

=>

EURRON Romanian <EURRON 4.9474 4.9440 -0.07% +0.02% =

leu

=>

EURHRK Croatian <EURHRK 7.5260 7.5295 +0.05% -0.11% =

kuna

=>

EURRSD Serbian <EURRSD 117.390 117.450 +0.05% +0.16% =

dinar

=>

0

0

Note:

calculated from

1800

daily

CET

change

Latest Previou Daily

Change

s

close

change in 2022 .PX

Prague

.PX

1284.99 1288.22 -0.25% #VALUE!

00

.BUX

Budapest .BUX

39688.4 39412.7 +0.70% -21.75%

6

4

.WIG20 Warsaw

<.WIG20 1692.48 1682.33 +0.60% -25.34%

>

.BETI Buchares .BETI 12586.3 12432.8 +1.23% -3.64%

t

0

0

.SBITO Ljubljan <.SBITO 1130.94 1131.29 -0.03% -9.92% P

a

P>

.CRBEX Zagreb

<.CRBEX 2021.96 2011.78 +0.51% -2.76%

>

.BELEX Belgrade <.BELEX 829.75 834.46 -0.56% +1.09% 15

15>

.SOFIX Sofia

<.SOFIX 614.87 614.28 +0.10% -3.27%

>

Yield

Yield

Spread Daily

(bid)

change vs Bund change

in

Czech

spread

Republic

CZ2YT=

2-year <CZ2YT= 6.2650 0.0010 +544bp

-2bps RR

RR>

s CZ5YT=

5-year <CZ5YT= 5.7020 0.0410 +451bp

+1bps RR

RR>

s CZ10YT

<CZ10YT 5.1720 0.0050 +369bp

-4bps =RR

10-year =RR>

s

Poland

PL2YT=

2-year <PL2YT= 7.7120 0.2280 +689bp +21bps RR

RR>

s PL5YT=

5-year <PL5YT= 7.4680 0.1400 +627bp +11bps RR

RR>

s PL10YT

<PL10YT 7.1370 0.1280 +565bp

+8bps =RR

10-year =RR>

s

FORWARD

3x6

6x9

9x12

3M

interba

nk

Czech

<CZKFRA

7.60

7.61

7.39

7.22

Rep

><PRIBO

R=>

Hungary <HUFFRA

9.49

9.87

9.80

7.73

><BUBOR

=>

Poland

<PLNFRA

8.03

8.20

8.16

6.98

><WIBOR

=>

Note:

are for ask

FRA

prices

quotes

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

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


Reporting by Alan Charlish in Warsaw, Gergely Szakacs in Budapest, Jan Lopatka in Prague; Editing by Krishna Chandra Eluri

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