By Alan Charlish WARSAW, Oct 27 (Reuters) - Central European currencies steadied on Friday, hanging on to some gains on the expectation that euro zone rates have peaked, although the Czech crown was still near 15-month lows before a Czech central bank meeting next week that may deliver a first interest rate cut.
The European Central Bank left interest rates unchanged as expected on Thursday, ending an unprecedented streak of 10 consecutive rate hikes. Meanwhile, markets are pricing in a good chance of a cut in rates at the Czech National Bank's (CNB), Nov. 2 policy meeting, with inflation coming down and forecast to be back at target in the first half of 2024.
The Czech crown was little changed against the euro at 24.632, steadying after it firmed from its lowest point since July 2022 in the previous session. CSOB said in a note that signals that ECB rates were at a peak helped the crown and other CEE currencies. "Apart from activity on main (global) markets, the crown will start looking toward next week's CNB meeting," CSOB said.
"Uncertainty around the timing of the first interest rate cut is enormous." In Hungary, the forint was also broadly stable at 382.80 after gaining on Thursday. "What we see in the gradual firming of the forint is the belief by markets, fuelled by recent speculations in the news, that there will be soon an agreement between the EU and Hungary regarding frozen funds," a Budapest-based trader said.
Hungary's top negotiator said earlier this month that talks with the EU on unblocking billions of euros worth of funding suspended due to concerns over democratic standards could be concluded by the end of November. The Polish zloty was 0.17% weaker at 4.461, but remained around 1.5% firmer compared to its level before Oct.
15 elections which gave pro-EU parties a majority. "We are still in the positive post-election mood and that was the biggest driver in October," said Pekao economist Piotr Bartkiewicz. "It seems to be durable, the shift in valuations of Polish assets have held in recent days after the elections." CEE SNAPSHOT AT MARKETS 1028 CET CURRENCI ES Latest Previous Daily Change bid close change in 2023 EURCZK Czech <EURCZK= 24.6320 24.6260 -0.02% -1.92% = crown > EURHUF Hungary <EURHUF= 382.8000 382.7000 -0.03% +4.35% = forint > EURPLN Polish <EURPLN= 4.4610 4.4535 -0.17% +5.12% = zloty > EURRON Romania <EURRON= 4.9674 4.9650 -0.05% -0.50% = n leu > EURRSD Serbian <EURRSD= 117.1300 117.1800 +0.04% +0.15% = dinar > Note: calculat 1800 daily ed from CET change Latest Previous Daily Change close change in 2023 .PX Prague 1349.81 1345.810 +0.30% +12.32% 0 .BUX Budapes 56726.68 56594.23 +0.23% +29.53% t .WIG20 Warsaw 2127.77 2120.96 +0.32% +18.74% .BETI Buchare 14251.85 14217.14 +0.24% +22.19% st Spread Daily vs Bund change in Czech spread Republi c CZ2YT= <CZ2YT=R 4.7740 -0.2790 +165bp -28bps RR 2-year R> s CZ5YT= <CZ5YT=R 4.4670 -0.1090 +175bp -10bps RR 5-year R> s CZ10YT <CZ10YT= 4.7450 -0.0540 +190bp -5bps =RR 10-year RR> s Poland PL2YT= <PL2YT=R 5.1890 0.0090 +206bp +1bps RR 2-year R> s PL5YT= <PL5YT=R 5.4250 -0.0300 +271bp -2bps RR 5-year R> s PL10YT <PL10YT= 5.8000 -0.0210 +295bp -2bps =RR 10-year RR> s FORWARD 3x6 6x9 9x12 3M interban k Czech 6.43 5.45 4.51 7.03 Rep <PRIBOR= > Hungary 10.34 9.09 8.12 11.49 Poland 5.32 4.94 4.68 5.64 Note: are for FRA ask quotes prices ************************************* ************************* (Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague, road Boldzsar Gyori in Budapest.
Editing by Jane Merriman)
The European Central Bank left interest rates unchanged as expected on Thursday, ending an unprecedented streak of 10 consecutive rate hikes. Meanwhile, markets are pricing in a good chance of a cut in rates at the Czech National Bank's (CNB), Nov. 2 policy meeting, with inflation coming down and forecast to be back at target in the first half of 2024.
The Czech crown was little changed against the euro at 24.632, steadying after it firmed from its lowest point since July 2022 in the previous session. CSOB said in a note that signals that ECB rates were at a peak helped the crown and other CEE currencies. "Apart from activity on main (global) markets, the crown will start looking toward next week's CNB meeting," CSOB said.
"Uncertainty around the timing of the first interest rate cut is enormous." In Hungary, the forint was also broadly stable at 382.80 after gaining on Thursday. "What we see in the gradual firming of the forint is the belief by markets, fuelled by recent speculations in the news, that there will be soon an agreement between the EU and Hungary regarding frozen funds," a Budapest-based trader said.
Hungary's top negotiator said earlier this month that talks with the EU on unblocking billions of euros worth of funding suspended due to concerns over democratic standards could be concluded by the end of November. The Polish zloty was 0.17% weaker at 4.461, but remained around 1.5% firmer compared to its level before Oct.
15 elections which gave pro-EU parties a majority. "We are still in the positive post-election mood and that was the biggest driver in October," said Pekao economist Piotr Bartkiewicz. "It seems to be durable, the shift in valuations of Polish assets have held in recent days after the elections." CEE SNAPSHOT AT MARKETS 1028 CET CURRENCI ES Latest Previous Daily Change bid close change in 2023 EURCZK Czech <EURCZK= 24.6320 24.6260 -0.02% -1.92% = crown > EURHUF Hungary <EURHUF= 382.8000 382.7000 -0.03% +4.35% = forint > EURPLN Polish <EURPLN= 4.4610 4.4535 -0.17% +5.12% = zloty > EURRON Romania <EURRON= 4.9674 4.9650 -0.05% -0.50% = n leu > EURRSD Serbian <EURRSD= 117.1300 117.1800 +0.04% +0.15% = dinar > Note: calculat 1800 daily ed from CET change Latest Previous Daily Change close change in 2023 .PX Prague 1349.81 1345.810 +0.30% +12.32% 0 .BUX Budapes 56726.68 56594.23 +0.23% +29.53% t .WIG20 Warsaw 2127.77 2120.96 +0.32% +18.74% .BETI Buchare 14251.85 14217.14 +0.24% +22.19% st Spread Daily vs Bund change in Czech spread Republi c CZ2YT= <CZ2YT=R 4.7740 -0.2790 +165bp -28bps RR 2-year R> s CZ5YT= <CZ5YT=R 4.4670 -0.1090 +175bp -10bps RR 5-year R> s CZ10YT <CZ10YT= 4.7450 -0.0540 +190bp -5bps =RR 10-year RR> s Poland PL2YT= <PL2YT=R 5.1890 0.0090 +206bp +1bps RR 2-year R> s PL5YT= <PL5YT=R 5.4250 -0.0300 +271bp -2bps RR 5-year R> s PL10YT <PL10YT= 5.8000 -0.0210 +295bp -2bps =RR 10-year RR> s FORWARD 3x6 6x9 9x12 3M interban k Czech 6.43 5.45 4.51 7.03 Rep <PRIBOR= > Hungary 10.34 9.09 8.12 11.49 Poland 5.32 4.94 4.68 5.64 Note: are for FRA ask quotes prices ************************************* ************************* (Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague, road Boldzsar Gyori in Budapest.
Editing by Jane Merriman)