Forint firms after cenbank hikes rates by 30 basis points
(Updates with cenbank decision, forint reaction)
By Anita Komuves
BUDAPEST, July 27 (Reuters) - The Hungarian forint firmed, rebounding from three-month lows after the central bank hiked its base rate by 30 basis points to 1.2%, above forecasts, opting to front-load its tightening cycle that it started last month in order to fight inflation.
The bank also raised its overnight deposit rate by 30 basis points to 0.25% and the collateralised loan rate by 30 basis points to 2.15%.
The bank will hold an online news conference at 1300 GMT.
"The forint is firming because this looks pretty hawkish, a 30 basis-point hike was the top of expectations. I don't think anyone expected a bigger hike than this," a Budapest-based trader said.
The forint EURHUF= was up 0.68% on the day and trading at 359.17 per euro by 1224 GMT. This level is more than half a percent stronger than the 361 level where the currency was trading immediately before the rate hike was announced.
A Reuters poll of analysts expected the National Bank of Hungary (NBH) to raise its base rate by 20 basis points to 1.1%.
The currency has been pressured in the past month by a weakening global sentiment in financial markets and debates between the Hungarian government and the EU over the disbursement of recovery funds.
Higher-than-expected June inflation also put a pressure on the forint. Hungary's headline inflation rate HUCPIY=ECI accelerated to an annual 5.3% in June from 5.1% in May, its highest in nearly a decade.
Commerzbank expects a 1.50% policy rate by the end of the NBH's tightening cycle.
"It would not matter much for the EUR-HUF exchange rate whether this is implemented in four 15bp steps, or a more front-loaded combination of 30bp steps. In any case, 1.50% rate would not be high enough to produce a stable exchange rate when inflation is running at 5%," Commerzbank analysts wrote.
Elsewhere, the Czech crown EURCZK= edged up 0.01% to 25.6800 per euro and the Polish zloty EURPLN= added 0.1% and was trading at 4.5895 as the global risk-off mood kept pressuring currencies in the region.
Most stocks in the region fell, with Warsaw .WIG20 leading losses with a 0.88% decline.
Latest Previous Daily
change in 2021 EURCZK= Czech
<EURCZK= 25.6800 25.6820 +0.01% +2.14%
EURHUF= Hungary <EURHUF= 359.170 361.6000 +0.68% +0.99%
EURPLN= Polish <EURPLN= 4.5895
4.5940 +0.10% -0.66%
EURRON= Romania <EURRON= 4.9195
4.9188 -0.01% -1.11%
EURHRK= Croatia <EURHRK= 7.5040
7.5183 +0.19% +0.58%
n kuna >
EURRSD= Serbian <EURRSD= 117.450 117.5500 +0.09% +0.10%
Latest Previous Daily
change in 2021 .PX
1197.27 1198.420 -0.10% +16.56
46995.5 46952.76 +0.09% +11.61
% .WIG20 Warsaw
.WIG20 2220.92 2240.65 -0.88% +11.94
11918.7 11964.20 -0.38% +21.55
% .SBITOP Ljublja <.SBITOP 1142.05 1141.80 +0.02% +26.77
% .CRBEX Zagreb
.CRBEX 1933.10 1929.65 +0.18% +11.14
% .BELEX1 Belgrad <.BELEX1 776.52
775.00 +0.20% +3.73% 5
568.39 -0.53% +26.34
vs Bund change
<CZ2YT=R 1.3940 -0.0030 +213bp
<CZ5YT=R 1.6020 -0.0150 +232bp
<CZ10YT= 1.6990 -0.0100 +213bp
<PL5YT=R 1.0040 -0.0320 +172bp
<PL10YT= 1.5230 -0.0150 +196bp
are for ask
Reporting by Anita Komuves; Editing by Susan Fenton and Giles Elgood
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