CEE MARKETS-Forint falls amid dollar strength, zloty eases ahead of rate decision

By Jason Hovet and Krisztina Than PRAGUE, March 8 (Reuters) - Hungary's forint fell past the psychological 380 per euro level for the first time in a week on Wednesday and the Czech crown eased to a near two-week low, with dollar strength cutting risk appetite in central Europe. In Poland, the zloty coasted ahead of the conclusion of a central bank meeting later in the day as markets expect policymakers to leave rates unchanged at two-decade highs while waiting for inflation to retreat. Central Europe's rate setters, who were ahead of most by starting sharp hiking cycles in 2021 to combat rising prices, have all shifted into stable policy in recent months even while global peers like the U.S. Federal Reserve and European Central Bank continue to rev up policy tightening. That is weighing on currencies somewhat, seen on Wednesday as interest for riskier assets was hit by dollar strength after Fed Chair Jerome Powell said late on Tuesday the U.S. bank would likely need to raise interest rates more than expected. The forint , which has been around 10-month highs in the past week, fell the most on Wednesay, shedding 0.8% to trade at 381.45 to the euro by 0923 GMT. A Budapest-based dealer said the forint's weakening could be due to lingering impacts from Powell's comments. Hungary's central bank governor Gyorgy Matolcsy also spoke on Wednesay, calling on the government to aid efforts to curb inflation. In his speech, Matolscy said the country faced risks from rising debt servicing costs. "I think the Powell impacts were largely done yesterday... I cannot see any other reason (for today's sharp weakening) than central bank chief Matolcsy's comments on the increase in the debt service burden, and on inflation," the dealer said.

Hungary's central bank has the European Union's highest base rate, at 13%, and is battling inflation that is stuck at 25% after a slight easing in February, seen in data on Wednesday. The bank has sought to keep rates unchanged, resisting government pressure to begin lowering borrowing costs after the economy slipped into a technical recession at the end of 2022. Poland's economy is also under pressure, although rate setters were expected to stay on hold on Wednesday. Markets will be watching new inflation projections for signs of when rates could start to fall.

"Today's meeting may bring some changes in communication, but we do not expect changes in interest rates today," Alor Bank said in a note. The zloty eased 0.1% at 4.695 per euro, while the crown was down 0.3% at 23.643, off a session low of 23.69. The Czech currency has retreated in recent sessions after touching a nearly 15-year high at the start of March. "The market is a bit nervous since we touched around 23.350," one trader said.

CEE SNAPSHO AT

MARKETS T 1023

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.6430 23.5800 -0.27% +2.18% = crown =>
EURHUF Hungary <EURHUF 381.450 378.500 -0.77% +4.72% = forint => 0 0
EURPLN Polish <EURPLN 4.6950 4.6895 -0.12% -0.12% = zloty =>
EURRON Romanian <EURRON 4.9200 4.9185 -0.03% +0.46% = leu =>
EURHRK Croatian <EURHRK 7.5330 7.5365 +0.05% +0.05% = kuna =>
EURRSD Serbian <EURRSD 117.220 117.275 +0.05% +0.07% = dinar => 0 0

Note: calcula 1800

daily ted CET

change from

Latest Previou Daily Change s

close change in 2023 .PX Prague 1412.44 1400.07 +0.88% +17.53 00 % .BUX Budapest 42571.5 43391.0 -1.89% -2.79% 3 2
.WIG20 Warsaw <.WIG20 1842.57 1853.40 -0.58% +2.82% >
.BETI Buchares 12370.5 12432.0 -0.50% +6.06% t 3 8
.SBITO Ljubljan <.SBITO 1197.36 1196.40 +0.08% +14.16 P a P> % .BELEX Belgrade <.BELEX 891.81 889.95 +0.21% +8.15% 15 15>
.SOFIX Sofia <.SOFIX 630.28 627.17 +0.50% +4.79% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 5.8520 0.0000 +252bp -1bps RR RR> s
CZ5YT= 5-year <CZ5YT= 5.3270 0.0040 +247bp +0bps RR RR> s
CZ10YT <CZ10YT 5.0000 0.0430 +230bp +4bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 6.2360 0.0110 +291bp +0bps RR RR> s
PL5YT= 5-year <PL5YT= 6.3570 0.0270 +350bp +2bps RR RR> s
PL10YT <PL10YT 6.3700 0.0230 +367bp +2bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.24 7.13 6.70 7.20 Rep ><PRIBO

R=>

Hungary <HUFFRA 14.85 13.14 11.99 16.29 ><BUBOR

=>

Poland <PLNFRA 6.99 6.93 6.62 6.94 ><WIBOR

=>

Note: are for

FRA ask

quotes prices

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(Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Alan Charlish in Warsaw; Editing by Kim Coghill)

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