FX firms as investors eye further rate hikes



Oct 14 (Reuters) - Central European currencies were firmer on Thursday, as investors focused on the prospect of further rate hikes in the region.

The region's central banks have been hiking borrowing costs to deal with some of the highest inflation in the European Union, with Poland — where most rate-setters had previously stuck to a dovish tone — delivering an unexpected 40-basis-point hike last week.

"The zloty is appreciating along with the expectations of interest rate hikes this year (quotations of the FRA curve assume a 50 bp rate hike this year)," PKO BP analysts said in a note.

"Additionally, the valuation of the PLN is also supported by the global market sentiment, which has slightly improved in recent days."

At 0854 GMT, the Polish zloty EURPLN= was 0.24% firmer against the euro at 4.571, while the Hungarian forint EURHUF= was 0.19% firmer at 359.60 and the Czech crown EURCZK= was 0.06% stronger at 25.371.

The benchmark 10-year Polish yield PL10YT=RR hovered near 2-1/2-year highs at 2.71% after rising sharply on Wednesday. The Czech 10-year yield CZ10YT=RR rose 2 basis points to 2.375%.

"The selloff in Polish bonds accelerated.... as the markets were pricing a pretty aggressive hike path of the National Bank of Poland," said Wojciech Mazurkiewicz, an economist at Santander Bank Polska.

Poland's central bank on Wednesday bought government and government-secured bonds worth a total of 578 million zlotys. It had offered to buy bonds worth 1 billion zlotys, much less than in previous auctions.

"The October auction confirms that the purchase of assets carried out by the NBP is in practice being phased out," PKO BP said.

Stock markets in Budapest .BUX and Warsaw .WIG20 were 0.46% and 0.59% higher respectively, while Prague's main index .PX was little changed.

In Poland, shares in clothing retailer CCC CCCP.WA rose 2.8% after its second quarter net result turned to a profit of 100.0 million zlotys.

CEE

SNAPSHO AT

MARKETS T

1054 CET

CURRENC

IES

Latest Previous Daily

Change

bid

close

change in

2021 EURCZK= Czech

<EURCZK= 25.3710 25.3850 +0.06% +3.38

crown

>

% EURHUF= Hungary <EURHUF= 359.600 360.2900 +0.19% +0.87

forint

>

0

% EURPLN= Polish

<EURPLN= 4.5710

4.5820 +0.24% -0.26%

zloty

>

EURRON= Romanian <EURRON= 4.9495

4.9500 +0.01% -1.71%

leu

>

EURHRK= Croatian <EURHRK= 7.5100

7.5183 +0.11% +0.50

kuna

>

% EURRSD= Serbian <EURRSD= 117.500 117.5500 +0.04% +0.06

dinar

>

0

%

Note:

calculated from

1800

daily

CET

change

Latest Previous Daily

Change

close

change in

2021 .PX

Prague

.PX

1366.17 1365.640 +0.04% +33.0

0

1% .BUX

Budapest .BUX

54986.9 54733.73 +0.46% +30.5

9

9% .WIG20 Warsaw

.WIG20 2466.36 2451.89 +0.59% +24.3

1% .BETI

Buchares .BETI

12785.6 12745.39 +0.32% +30.3

t

1

9% .SBITOP Ljubljan <.SBITOP 1169.94 1164.98 +0.43% +29.8

a

>

7% .CRBEX Zagreb

.CRBEX 2049.87 2045.58 +0.21% +17.8

6% .BELEX1 Belgrade <.BELEX1 790.20

789.67 +0.07% +5.56 5

5>

% .SOFIX Sofia

.SOFIX

568.69

572.57 -0.68% +27.0

7%

Yield

Yield

Spread Daily

(bid)

change

vs Bund change

in

Czech

spread

Republic

CZ2YT=R

2-year <CZ2YT=R 2.3480

0.0340 +302bp +4bps R

R>

s CZ5YT=R

5-year <CZ5YT=R 2.3640

0.0300 +287bp +5bps R

R>

s CZ10YT=

<CZ10YT= 2.3750

0.0210 +253bp +4bps RR

10-year RR>

s

Poland

PL2YT=R

2-year <PL2YT=R 1.6340 -0.0940 +231bp -9bps R

R>

s PL5YT=R

5-year <PL5YT=R 2.2040 -0.0780 +271bp -6bps R

R>

s PL10YT=

<PL10YT= 2.7110 -0.0010 +286bp +2bps RR

10-year RR>

s

FORWARD

3x6

6x9

9x12

3M

interb

ank

Czech

CZKFRA

3.09

3.34

3.16

1.98

Rep

<PRIBOR=

>

Hungary

HUFFRA

2.42

2.81

3.01

1.85

BUBOR=

Poland

PLNFRA

1.43

1.82

2.18

0.68

WIBOR=

Note:

are for ask

FRA

prices

quotes

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

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


Reporting by Alan Charlish in Warsaw, Anita Komuves in Budapest and Jason Hovet in Prague; editing by Uttaresh.V

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