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Hungary's forint off 1.2%, EM FX down 0.3%
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South African rand down 0.4% after CPI rises 7.1% y/y in March
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Czech crown flat after PPI rises at slowest rate since Oct
2021
By Bansari Mayur Kamdar April 19 (Reuters) - The Hungarian forint fell against the euro on Wednesday, leading losses among emerging market peers, after central bank deputy governor Barnabas Virag said the National Bank of Hungary (NBH) could decide to narrow its interest rate corridor next week. The forint slid 1.2% to 375 against the euro, falling from one-year highs of around 371 seen this week. Virag told the business website vg.hu the central bank could decide on "a significant narrowing" of the upper end of the rate corridor at next Tuesday's meeting of the Monetary Council. "Remarks from Virag could be an attempt to test how the market may respond to lower interest rates," said Piotr Matys, senior FX analyst at In Touch Capital Markets. "Perhaps the NBH is also becoming a bit concerned about the pace of hot money inflows fuelled by attractive carry trade offered by the forint."
The NBH has the European Union's highest base interest rate, at 13%, holding firm on the hawkish policy like its regional peers and pushing back against market expectations of quick interest rate cuts. The bank had raised its overnight collateralised loan rate, the top of the corridor, to 25% from 15.5% last October and launched a new one-day deposit with an 18% interest rate as the forint had plunged to all-time lows past 430 to the euro. Other central and eastern European currencies edged lower against the euro, while the Czech crown was subdued.
Data showed Czech producer price growth eased to 10.2% year-on-year in March, from 16.0% in the previous month, to show its lowest rate since October 2021. Overall, the MSCI's index for emerging market currencies slipped 0.3% as the U.S. dollar ticked higher ahead of a slew of Federal Reserve speakers and Wall Street earnings this week that will be scrutinised for cues on the U.S. rate hike path.
South Africa's rand weakened 0.4% against the dollar after data showed March consumer prices in Africa's most industrialised economy rose 7.1% in annual terms from 7.0% in February, above analyst estimates. In Turkey, consumer confidence index rose 9.2% to 87.5 points in April, official data showed, resuming an upward trend after a dip to 80.1 points in the previous month. The Turkish lira , however, slipped 0.2% against the dollar.
Interest rates in Turkey are rising amid expectations that government policies will become more orthodox no matter who wins May 14 elections, and after a regulatory change to make holding Turkish lira more attractive to counter FX demand, bankers said. The Russian rouble eased slightly against the dollar but remained range-bound as the market waited to see the impact of upcoming taxes and higher oil prices. (Reporting by Bansari Mayur Kamdar in Bengaluru Editing by Gareth Jones)
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