CEE MARKETS-Forint falls off 1-year peak as top corridor rate cut signalled

By Boldizsar Gyori and Jason Hovet BUDAPEST, April 19 (Reuters) - The forint fell more than 1% against the euro on Wednesday after Hungary's central bank Deputy Governor Barnabas Virag signalled policymakers could decide to narrow the interest rate corridor next week, a step toward policy normalisation. Central Europe's rate setters have held steady on policy since last year after year-long tightening cycles that were sharper than what global peers are undertaking in their own rate hikes now. Hungary's base rate, at 13%, is the highest in the European Union, while it maintains an 18% one-day deposit rate in place since last October to buck up a forint that had been plunging to new lows. Virag told the business website vg.hu in an interview published on Wednesday the bank could decide on "a significant narrowing" of the upper end of the rate corridor at next Tuesday's meeting of the Monetary Council. He added the question of the 18% rate on the one-day deposit could be on the agenda only at subsequent monthly policy meetings. The forint was down 1.4% at 376.50 to the euro at 0828 GMT after trading below 370 for the first time in a year in the previous session. "Although the price is going up, I see a lot of sellers of the euro," a local trader said. "I expect the market to calm down, as long as the overnight deposit rate stands at 18% there is nothing to talk about." With inflation still above 25%, Hungary's central bank has been pushing back against market expectations of looming interest rate cuts, just like other central European policymakers. Market focus has been centred on who in central Europe could be the first to begin unwinding the past sharp hikes to base rates around the region. Czech central bank Vice-Governor Eva Zamrazilova said in the Prostor X podcast on Tuesday that rate cuts could not happen until inflation was in single digits and clearly aimed at the bank's target range of 1-3%. The crown remained weakened on Wednesday, down 0.1% on the day at 23.458 to the euro and is drifting further away from a 15-year high of 23.233 hit this month. The Polish zloty and Romanian leu were both steady in range trading.

CEE SNAPSHO AT

MARKETS T 1028

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.4580 23.4340 -0.10% +2.98% = crown =>
EURHUF Hungary <EURHUF 376.500 371.100 -1.43% +6.09% = forint => 0 0
EURPLN Polish <EURPLN 4.6260 4.6250 -0.02% +1.37% = zloty =>
EURRON Romanian <EURRON 4.9369 4.9352 -0.03% +0.11% = leu =>
EURRSD Serbian <EURRSD 117.210 117.295 +0.07% +0.08% = dinar => 0 0

Note: calcula 1800

daily ted CET

change from

Latest Previou Daily Change s

close change in 2023 .PX Prague 1414.89 1417.06 -0.15% +17.74 00 % .BUX Budapest 43597.0 43751.6 -0.35% -0.45% 6 0
.WIG20 Warsaw <.WIG20 1880.48 1896.92 -0.87% +4.94% >
.BETI Buchares 12521.7 12497.9 +0.19% +7.36% t 7 6
.SBITO Ljubljan <.SBITO 1244.80 1243.91 +0.07% +18.69 P a P> % .BELEX Belgrade <.BELEX 887.83 886.66 +0.13% +7.67% 15 15>
.SOFIX Sofia <.SOFIX 616.96 617.60 -0.10% +2.57% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 5.7840 0.0680 +284bp +2bps RR RR> s
CZ5YT= 5-year <CZ5YT= 5.2220 -0.0130 +267bp -6bps RR RR> s
CZ10YT <CZ10YT 4.8240 0.0030 +231bp -4bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 6.1590 0.0160 +322bp -4bps RR RR> s
PL5YT= 5-year <PL5YT= 6.1410 0.0140 +359bp -4bps RR RR> s
PL10YT <PL10YT 6.1720 0.0170 +366bp -3bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.18 6.92 6.31 7.18 Rep ><PRIBO

R=>

Hungary <HUFFRA 14.90 13.61 11.70 16.31 ><BUBOR

=>

Poland <PLNFRA 6.91 6.81 6.47 6.90 ><WIBOR

=>

Note: are for

FRA ask

quotes prices

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(Reporting by Jason Hovet in Prague and Boldizsar Gyori in Budapest, Editing by Angus MacSwan)

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