(Updates with Romanian cenbank decision, market reaction)
By Anita Komuves and Luiza Ilie
BUDAPEST/BUCHAREST, Oct 5 (Reuters) - The Romanian leu
briefly firmed on Tuesday after the central bank hiked its
benchmark interest rate to tackle rising inflation, but soon
gave up gains as markets had already priced in the policy
The central bank raised its main rate by a quarter point to
1.50% for the first time since the pandemic, as rising inflation
outweighed a sharp rise in COVID-19 infections and an ongoing
The Romanian leu edged up after the rate hike,
then retreated to earlier levels and was up 0.4% on the day,
trading at 4.95 versus the euro.
"The market appears to have priced it in," said Ciprian
Dascalu, chief economist at Romania's BCR Bank. "The early hike
should be positive for the long-end of the yield curve."
Investors also eyed a vote in Romania's parliament that
toppled the nine-month old minority government of Prime Minister
Florin Citu by a large majority in a vote of no-confidence on
"The backdrop of rising inflation, large twin deficits and
currency weakness means that further rate hikes are likely to be
delivered over the next 12 months or so," Capital Economics
wrote in a note.
The Polish zloty slid 0.01% to 4.5975 per euro,
giving up some recent gains fuelled by growing rate hike
expectations as data last week showed higher-than-expected
inflation in September.
The National Bank of Poland holds its next rate-setting
meeting on Wednesday, where analysts expect no change in the
base rate. However, some economists think there could be a hike
before the end of the year.
The Hungarian forint eased 0.04% to 356.90 per
euro, retreating after gains that started on Friday when Deputy
Central Bank Governor Barnabas Virag flagged further
15-basis-point rate hikes.
Long-term Hungarian government bond yields were stable on
Tuesday after rising about 10 basis points on Monday.
Yields on the long end of the curve started to rise on
Friday after Virag's comments that signalled the bank would
continue to exit from its quantitative easing program,
fixed-income traders in Budapest said.
The yield on the 10-year bond was about 3.48%.
Prague's equities outperformed the region and added 1.4% as
Czech utility CEZ's shares continued to soar, hitting
a fresh 9-year high as European wholesale power prices surge.
CEZ shares were up 4.44% by 1300 GMT.
CEE SNAPSHO AT
MARKETS T 1459 CET
Latest Previous Daily Change
bid close change in 2021
EURHUF= Hungary 0
EURRSD= Serbian 0
Note: calculated from 1800
change Latest Previous Daily Change
close change in 2021
.PX Prague 1360.65 1341.870 +1.40% +32.47
.BUX Budapes 53125.1 53234.94 -0.21% +26.17
t 4 %
.WIG20 Warsaw 2349.86 2338.09 +0.50% +18.44
.BETI Buchare 12625.8 12611.18 +0.12% +28.76
st 7 %
.SBITOP Ljublja <.SBITOP 1164.79 1167.41 -0.22% +29.30
na > %
.CRBEX Zagreb 2033.99 2027.35 +0.33% +16.94
.BELEX1 Belgrad <.BELEX1 802.65 800.88 +0.22% +7.22%
5 e 5>
.SOFIX Sofia 570.79 570.68 +0.02% +27.54
Yield Yield Spread Daily
(bid) change vs Bund change
3x6 6x9 9x12 3M
Czech 2.73 2.98 3.13 1.83
Hungary 2.34 2.59 2.81 1.79
Poland 0.74 1.16 1.52 0.25
Note: are for ask
(Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague and Alan Charlish in Warsaw; Editing by Ramakrishnan
M. and Maju Samuel)