FX firms on bets on Hungarian, Czech rate hikes
By Alan Charlish
June 16 (Reuters) - Central European currencies were mostly firmer on Wednesday, as investors anticipated rate hikes in the region and awaited a meeting of the U.S. Federal Reserve that is likely to give some indication of when policy normalisation could start.
Faced with rising inflation, some Fed policymakers have started to question whether it should keep in place the loose monetary policy introduced to help the economy weather the COVID-19 pandemic.
Nevertheless, any policy change in the U.S. is expected to be months down the road, as the Fed weighs risks to the recovery.
In contrast, policymakers in Hungary and the Czech Republic have signalled that normalisation is imminent.
"If the Fed remains dovish, the breath of relief in the main markets should bring an increase in risk appetite that will stop the depreciation of the (CEE) region's currencies," Konrad Bialas, chief economist at DM TMS Brokers said in a note.
At 0902 GMT the Hungarian forint EURHUF= was 0.30% firmer against the euro at 351.15.
Hungary's central bank has signalled it will raise rates at its meeting on June 22, making it the first in the European Union to start normalising policy since the COVID-19 pandemic began.
The Czech central bank holds a rate setting meeting on June 23, with several Monetary Policy Council (MPC) members signalling a hike is likely. Market rates have risen up to 6 basis points since Tuesday morning in expectation of such a move.
"...We see CNB's June meeting as a highly probable starting point of monetary policy normalisation," Komercni Banka trader Dalimil Vyskovsky said in a note.
The Czech crown EURCZK= was 0.04% firmer at 25.4550, while the Polish zloty EURPLN= was 0.12% stronger at 4.5275.
The zloty has slipped over 1% since the Polish central bank kept rates on hold last Wednesday, with a statement after the decision and a Friday press conference by governor Adam Glapinski showing no signs of a shift towards a more hawkish bias despite a spike in inflation.
Glapinski on Friday also brushed aside speculation that the central bank could begin winding down its bond-buying programme.
On Wednesday, the central bank offered to buy government and government-secured bonds worth 10 billion zlotys ($2.68 billion), up from the 5 billion zlotys which it offered to buy at its last auction.
The Polish 10-year bond yield PL10YT=RR was little changed at 1.743%.
Latest Previou Daily
change in 2021 EURCZK Czech
<EURCZK 25.4550 25.4640 +0.04% +3.04% =
EURHUF Hungary <EURHUF 351.150 352.200 +0.30% +3.29% =
<EURPLN 4.5275 4.5329 +0.12% +0.70% =
EURRON Romanian <EURRON 4.9242 4.9235 -0.01% -1.20% =
EURHRK Croatian <EURHRK 7.4910 7.4885 -0.03% +0.75% =
EURRSD Serbian <EURRSD 117.450 117.580 +0.11% +0.10% =
Latest Previou Daily
change in 2021 .PX
1175.07 1175.34 -0.02% +14.40
48850.7 49299.4 -0.91% +16.01
% .WIG20 Warsaw
<.WIG20 2237.16 2230.37 +0.30% +12.76
% .BETI Buchares .BETI 11640.2 11614.8 +0.22% +18.71
% .SBITO Ljubljan <.SBITO 1148.91 1145.73 +0.28% +27.54 P
% .CRBEX Zagreb
<.CRBEX 1981.28 1973.60 +0.39% +13.91
% .BELEX Belgrade <.BELEX 782.32 782.32 +0.00% +4.50% 15
<.SOFIX 549.04 547.41 +0.30% +22.68
change vs Bund change
2-year <CZ2YT= 0.2360 -0.0480 +091bp
5-year <CZ5YT= 1.5550 0.0000 +216bp
<CZ10YT 1.7320 -0.0060 +197bp
2-year <PL2YT= 0.3200 -0.0120 +099bp
5-year <PL5YT= 1.2200 -0.0040 +183bp
<PL10YT 1.7430 -0.0050 +198bp
Note: FRA quotes are for
($1 = 3.7336 zlotys)
Reporting by Alan Charlish in Warsaw and Jason Hovet in Prague; editing by Barbara Lewis
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