CEE MARKETS-Forint eases after S&P downgrade, other currencies hold steady

By Krisztina Than BUDAPEST, Jan 30 (Reuters) - The forint eased on Monday, underperforming its peers, and Hungarian stocks fell after S&P downgraded the country's debt rating late on Friday, citing persistently high inflation. Credit ratings agency S&P cut Hungary's long- and short-term foreign and local currency ratings to 'BBB-/A-3' from 'BBB/A-2' on Friday, three weeks after Fitch cut its outlook on Hungary's long-term foreign currency issuer default rating to "negative" from "stable". The forint , which has gained 1.8% so far in 2023, retreated on Monday, easing about 0.9%, while other regional currencies were broadly stable. The shares of OTP Bank dropped 2.3% by 0916 GMT. The Budapest bourse index fell 1.75% by 0916 GMT while Warsaw stocks were 0.9% lower. "The forint is weakening on the news of the downgrade ... with the exchange rate easing past the 389 support but there is an important resistance level at 392," brokerage Equilor said. The forint's losses were contained amid a generally positive emerging market sentiment.

Analysts at Magyar Bankholding said in a note that volatility could increase in Central European currency markets this week as both the Federal Reserve and the European Central Bank (ECB) will hold rate metings, which will have implications for the region. The region's currencies have been helped by lower gas prices in recent weeks. "Correlation between CEE currencies and European gas prices has increased substantially since Q4 2022," Citigroup said in a note.

The Czech bank meets to decide on interest rates later this week and is widely seen holding rates steady for a fifth straight meeting after taking the key policy to a more than two-decade high last year. The Czech crown was just off 14-year highs hit last week, trading flat at 23.815 to the euro.

"(And) the National Bank of Hungary is likely to keep its hawkishness for longer until the CPI peaks," Citigroup added.

Hungary's annual inflation was running at 24.5% in December and is expected to accelerate further in January.

CEE SNAPSHO AT

MARKETS T 0938

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.8150 23.8100 -0.02% +1.44% = crown =>
EURHUF Hungary <EURHUF 392.450 389.050 -0.87% +1.78% = forint => 0 0
EURPLN Polish <EURPLN 4.7065 4.7040 -0.05% -0.36% = zloty =>
EURRON Romanian <EURRON 4.9020 4.8935 -0.17% +0.83% = leu =>
EURHRK Croatian <EURHRK 7.5330 7.5365 +0.05% +0.05% = kuna =>
EURRSD Serbian <EURRSD 117.320 117.340 +0.02% -0.02% = dinar => 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change s

close change in 2023 .PX Prague 1330.10 1331.01 -0.07% +10.68 00 % .BUX Budapest 46040.3 46645.4 -1.30% +5.13% 0 1
.WIG20 Warsaw <.WIG20 1891.81 1911.50 -1.03% +5.57% >
.BETI Buchares 12197.0 12185.7 +0.09% +4.57% t 2 9
.SBITO Ljubljan <.SBITO 1117.06 1111.48 +0.50% +6.51% P a P>
.BELEX Belgrade <.BELEX 848.85 852.41 -0.42% +2.94% 15 15>
.SOFIX Sofia <.SOFIX 615.16 614.04 +0.18% +2.27% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 6.0120 0.1870 +337bp +13bps RR RR> s
CZ5YT= 5-year <CZ5YT= 4.9440 -0.0220 +262bp -9bps RR RR> s
CZ10YT <CZ10YT 4.5720 0.0510 +227bp -1bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 5.9430 0.0480 +330bp -1bps RR RR> s
PL5YT= 5-year <PL5YT= 5.8480 0.0400 +353bp -2bps RR RR> s
PL10YT <PL10YT 5.8800 0.0850 +358bp +3bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.17 6.93 6.38 7.21 Rep ><PRIBO

R=>

Hungary <HUFFRA 14.69 13.01 11.59 16.03 ><BUBOR

Poland <PLNFRA 6.98 6.92 6.46 6.94 ><WIBOR

Note: are for ask

FRA prices

quotes

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

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(Reporting by Jason Hovet in Prague, Krisztina Than in Budapest; Editing by Christina Fincher)

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