Forint hits fresh record low, stocks under pressure

Forint hits fresh record low, stocks under pressure

3 Oct    Finance News

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PRAGUE —

Hungary’s forint fell to a fresh record low on Monday,

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staying under pressure amid worries over EU funds and energy

prices, although other central European currencies found slight

relief after the U.S. dollar lost some of its recent strength.

The Polish zloty was up 0.3% at 4.838 to the

euro at 1010 GMT, while the Czech crown was steady

24.55 and Romania’s leu traded unchanged near 4.948.

But stock markets fell as much as 2%, led by Warsaw

, along with European peers as economic outlooks stayed

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in focus and kept pressure on the region.

In central Europe, purchasing manager indices (PMIs) showed

a choppy economic landing ahead, with Hungary’s manufacturing

sentiment signaling a contraction in September for the first

time in 17 months.

The forint has dropped more than 12% since the

start of 2022, hitting a record low last week amid worries over

Europe’s energy crisis hitting hard and after the central bank

signaled the end of sharp interest rate hikes.

Pressure on the forint is also higher compared to peers

while Hungary stays in dispute with the European Union, holding

up funds’ disbursement.

On Monday, it had dropped 0.6% to 425.2 to the euro, heading

past an all-time low of 425 hit on Thursday.

Analysts said the currency remained vulnerable.

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“The forint is still under heavy pressure by the current

account deficit caused by energy prices, which causes a

constant demand for foreign currencies, which could be balanced

out by access to European Union funds,” Takarekbank said.

“So, it does not matter that the base rate is the highest

[in the region] and the real interest rate is the lowest, it can

hardly support the forint.”

The Hungarian central bank last week lifted its base rate to

13% with a 125-basis-point move. In Poland, analysts expect a

milder hike on Wednesday this week, forecasting a rise of 25

basis points to 7.00%.

But markets will be keen on the message after the decision.

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Central banks in Hungary and the Czech Republic are signaling

an end to rate hikes as economies slow.

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“We believe that the (central bank) meeting may support the

stabilization of the zloty, but it is hard to expect a

significant appreciation of the Polish currency, especially as

the recent sell-off was motivated by global factors,” Polish

bank PKO BP said.

“We expect the EUR/PLN rate to stay above 4.80 in the coming

week.”

CEE SNAPSHO AT

MARKETS T 1210

CET

CURRENC

IES

Latest Previou Daily Change

s

bid close change in 2022

EURCZK Czech

EURHUF Hungary 0 0

EURPLN Polish

EURRON Romanian

EURHRK Croatian

EURRSD Serbian 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change

s

close change in 2022

.PX Prague 1109.05 1123.37 -1.27% #VALUE!

00

.BUX Budapest 37582.4 37838.3 -0.68% -25.90%

6 0

.WIG20 Warsaw <.wig20>

.BETI Buchares 10686.9 10639.4 +0.45% -18.18%

t 7 1

.SBITO Ljubljan <.sbito p a>

.CRBEX Zagreb <.crbex>

.BELEX Belgrade <.belex>

.SOFIX Sofia <.sofix>

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year s

CZ5YT= 5-year s

CZ10YT s

Poland

PL2YT= 2-year s

PL5YT= 5-year s

PL10YT s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech

Hungary

Poland

Note: are for ask

FRA prices

quotes

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

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

(Reporting by Jason Hovet in Prague, Anita Komuves in Budapest,

and Alan Charlish in Warsaw; Editing by Maju Samuel)

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