(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
tightening.
     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
government crisis.
    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
Tuesday. 
    "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           
                             CURRENC                            
                             IES                         
                             Latest   Previous  Daily    Change
                             bid      close     change   in 2021
 EURCZK=  Czech                                         
 EURHUF=  Hungary                 0                     
 EURPLN=  Polish                                        
 EURRON=  Romania                                       
 EURHRK=  Croatia                                       
 EURRSD=  Serbian                 0                     
          Note:    calculated from              1800            
          daily                                 CET      
          change Latest   Previous  Daily    Change
                                      close     change   in 2021
 .PX      Prague             1360.65  1341.870   +1.40%   +32.47
                                             0                 %
 .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
                                                         in
          Czech                                          spread
          Republi                                        
          c                                              
 CZ2YT=R                                            s  
 CZ5YT=R                                            s  
 CZ10YT=                                           s  
          Poland                                                
 PL2YT=R                                            s  
 PL5YT=R                                            s  
 PL10YT=                                           s  
                   FORWARD                                      
                             3x6      6x9       9x12     3M
                                                         interba
                                                         nk
          Czech                 2.73      2.98     3.13     1.83
          Rep                                           
          Hungary               2.34      2.59     2.81     1.79
                                                         
          Poland                0.74      1.16     1.52     0.25
                                                         
          Note:    are for ask                                  
          FRA      prices                                
          quotes                                         
          *********************************************         
          *****************                              
 

 (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague and Alan Charlish in Warsaw; Editing by Ramakrishnan
M. and Maju Samuel)
  
 
 


Source link

Leave a Reply

Your email address will not be published.