CEE MARKETS-FX weakens after holiday gains, stocks up ahead of inflation data

By Jason Hovet PRAGUE, April 11 (Reuters) - Central Europe's currencies struck a weaker tone on Tuesday as several local markets returned from a long holiday weekend, while stocks followed European peers higher as investors settled in for U.S. inflation data this week. Central European policymakers have stuck to leaving interest rates at high levels while sounding a hawkish message in recent weeks to persuade investors to ditch bets on rate cuts coming soon, especially with inflation still at double-digit rates. Traders are now focused on inflation readings due around central Europe, as well as in the United States on Wednesday for clues on the likelihood of more Federal Reserve rate hikes that would narrow the rate differential with emerging markets. Currencies in central Europe have rallied behind the hawkish messaging of late, and the Czech crown and Hungarian forint touched more than one-month highs on Friday and Monday, even as local markets remained closed for the Easter holiday. On Tuesday, currencies retreated marginally, with the crown falling 0.4% to 23.43 to the euro and the forint down 0.2% at 376.20 per euro. "The move was caused mainly by the 'wow' effect when people came back from the Easter holiday and found how strong the crown is. A lot of them want to sell the crown now," a Prague trader said. Goldman Sachs said last week that core inflation would remain high although headline inflation could fall due to base effect and easing energy prices. The fall, though, would be limited, with inflation in Hungary, for example, seen dropping to just a tad below 25%. At the end of March, the Hungarian central bank kept its base rate at 13% - the highest in the EU - and said it should remain there for a prolonged period. The Czech central bank, in minutes from a March 29 meeting published on Tuesday, said board members agreed an interest rate cut was not on the horizon. Poland's central bank Governor Adam Glapinski also last week was a bit more hawkish than previously, some analysts said. The zloty , which had trailed gains seen by regional peers so far in 2023, was 0.2% stronger, at 4.68 to the euro, on Tuesday. Some analysts see any move being limited. "The EUR/PLN exchange rate remains in a sideways trend for over a month, i.e. 4.6620 - 4.7120 and in our opinion it will be difficult to find arguments that could break the zloty in either direction this week," Bank Millennium said.

CEE SNAPSHO AT

MARKETS T 1106

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.4300 23.3350 -0.41% +3.11% = crown =>
EURHUF Hungary <EURHUF 376.200 375.600 -0.16% +6.18% = forint => 0 0
EURPLN Polish <EURPLN 4.6800 4.6880 +0.17% +0.20% = zloty =>
EURRON Romanian <EURRON 4.9320 4.9300 -0.04% +0.21% = leu =>
EURRSD Serbian <EURRSD 117.200 117.250 +0.04% +0.09% = dinar => 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change s

close change in 2023 .PX Prague 1395.39 1381.33 +1.02% +16.12 00 % .BUX Budapest 44308.9 44217.8 +0.21% +1.18% 1 5
.WIG20 Warsaw <.WIG20 1778.93 1754.24 +1.41% -0.73% >
.BETI Buchares 12445.3 12425.2 +0.16% +6.70% t 1 9
.SBITO Ljubljan <.SBITO 1217.71 1207.86 +0.82% +16.11 P a P> % .BELEX Belgrade <.BELEX 865.19 878.48 -1.51% +4.92% 15 15>
.SOFIX Sofia <.SOFIX 612.37 611.07 +0.21% +1.81% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 5.7980 0.0480 +315bp -5bps RR RR> s
CZ5YT= 5-year <CZ5YT= 4.9720 0.0520 +272bp -3bps RR RR> s
CZ10YT <CZ10YT 4.5430 0.0660 +230bp +0bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 6.1100 -0.0580 +346bp -16bps RR RR> s
PL5YT= 5-year <PL5YT= 6.0830 0.0470 +383bp -4bps RR RR> s
PL10YT <PL10YT 6.1260 0.0550 +388bp -1bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.15 6.78 6.05 7.18 Rep ><PRIBO

R=>

Hungary <HUFFRA 14.96 13.17 11.99 16.30 ><BUBOR

Poland <PLNFRA 6.84 6.66 6.25 6.90 ><WIBOR

Note: are for ask

FRA prices

quotes

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

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

(Reporting by Jason Hovet in Prague, Krisztina Than in Budapest, and Pawel Florkiewicz in Warsaw; Editing by Sohini Goswami)

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