CEE MARKETS-Rate hike expectations buoy forint, zloty as central banks fight inflation

By Anita Komuves BUDAPEST, Dec 6 (Reuters) – Most Central European currencies firmed on Monday, supported by expectations of more interest rate hikes in Hungary and Poland later this week as central banks in the region are fighting a jump in inflation. The Hungarian forint gained 0.48% and was trading at 363.32 per euro as markets were expecting another hike of the one-week deposit rate on Thursday at the central bank’s weekly tender, two FX traders in Budapest said. “Markets are pricing in further rate increases this week in Hungary and Poland as well, which is lifting currencies in the CEE region,” one trader said. “The global mood is also somewhat brighter.” Last Thursday, the forint hit a three-week high after the bank raised rates for the fifth time in under three weeks to tame rising inflation. Investors are also keeping an eye on key November inflation data in Hungary to be published on Wednesday. According to a Reuters poll, November headline inflation is expected at an annual 7.3%. The Polish zloty was 0.2% stronger and trading at 4.5880 to the euro as markets were looking ahead to the central bank’s rate-setting meeting on Wednesday, where a Reuters poll of analysts expects a 50 basis-point rate hike. Last month, the Polish central bank surprised markets with a massive 75 basis-point hike to 1.25%. Central Bank Governor Adam Glapinksi said last week that there was room to raise interest rates, but not unlimited. “We would be surprised if the MPC chose a smaller rate hike than 50 bps, especially in light of stubbornly high core inflation,” Citi wrote in a research note. The Czech crown added 0.17% and was trading at 25.380 versus the common currency. In the Czech Republic, markets scaled back rate hike expectations at the end of November after Central Bank Governor Jiri Rusnok told Reuters that he saw rate hikes closer to the standard move of 25 basis points. The CNB’s monetary department director Petr Kral said in an interview published on Monday that the level of market pricing on further Czech interest rate hikes is in line with the central bank’s forecast. Stocks in the region firmed, with Bucharest adding 0.73%. Prague was 0.63% higher, while Warsaw strengthened 0.7%. Budapest led gains by adding 0.79%. Hungary’s OTP Bank was 1.41% higher by 0927 GMT after it said that it signed a deal to purchase Albania’s Alpha Bank. CEE SNAPSHOT AT MARKETS 1020 CET CURRENCI ES Latest Previou Daily Change s bid close hm in 2021 EURCZK Czech 25.3800 25.4230 +0.17 +3.35 = crown % % EURHUF Hungary 363.3200 365.050 +0.48 -0.17% = forint 0 % EURPLN Polish 4.5880 4.5973 +0.20 -0.63% = zloty % EURRON Romania 4.9491 4.9485 -0.01% -1.70% = n leu EURHRK Croatia 7.5250 7.5265 +0.02 +0.30 = n kuna % % EURRSD Serbian 117.4800 117.580 +0.09 +0.08 = dinar 0 % % Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 .PX Prague 1371.40 1362.79 +0.63 +33.5 00 % 2% .BUX Budapes 51307.69 50904.9 +0.79 +21.8 t 1 % 5% .WIG20 Warsaw 2194.93 2179.71 +0.70 +10.6 % 3% .BETI Buchare 12469.37 12379.5 +0.73 +27.1 st 0 % 7% .SBITO Ljublja 1221.41 1221.16 +0.02 +35.5 P na % 8% .CRBEX Zagreb 1993.20 1993.37 -0.01% +14.6 0% .BELEX Belgrad <.BELEX15 831.26 833.64 -0.29% +11.0 15 e > 4% .SOFIX Sofia 620.27 624.54 -0.68% +38.6 0% Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republi c CZ2YT= ps CZ5YT= ps CZ10YT ps Poland PL2YT= ps PL5YT= ps s PL10YT ps FORWARD 3×6 6×9 9×12 3M interb ank Czech < 3.95 3.95 3.88 3.20 Rep PRIBOR=> Hungary < 4.50 4.53 4.50 3.47 BUBOR=> Poland < 3.24 3.42 3.41 2.21 WIBOR=> Note: are for ask prices FRA quotes ********************************************* ***************** (Additional reporting by Jason Hovet in Prague; Editing by Amy Caren Daniel)