PRAGUE, June 29 (Reuters) – The Hungarian forint climbed further on Wednesday from a record low after a shock interest rate hike of 185 basis points, dragging central European currencies higher.

the forint EURHUF= had gained 0.33% on the day at 08:14 GMT to trade at 396.0 per euro, well above an all-time low of 404.50 hit this week.

The forint has been Central and Eastern Europe’s worst performing currency this year as factors ranging from Hungary’s high budget deficit to the introduction of one-off taxes on banks and some businesses add pressure on the currency and complicate the central bank’s fight against inflation.

On Tuesday, the National Bank of Hungary (NBH) responded by raising its base rate by 185 basis points to 7.75%, the highest rate in the region. Most economists were expecting a less dramatic increase of 50 basis points.

“There is a correction in the forint, I would say NBH has limited the scope for further weakening,” a trader said. “However, it would take more to see further significant gains in the forint to levels below 390.”

Tuesday’s hike was the largest increase in the BNH’s base rate since an emergency 300 basis point move at the start of the global financial crisis in October 2008. The move comes as others in the region continue to tighten cycles that began last year as major central banks, including the US Federal Reserve, resort to rate hikes.

The Czech central bank last week raised its benchmark rate by 125 basis points to 7.00% in a final meeting under outgoing governor Jiri Rusnok, who will be replaced by Ales Michl, a board member who voted against the rate hikes.

While this may signal the end of the bull run, markets still see chances for further tightening as inflation, at its highest level in nearly three decades, remains strong. The bank said last week that it also continued to support monetary interventions to avoid any unwanted weakening of the krone.

The crown EURCZK= was a little higher at 24.725 per euro on Wednesday, stuck in a range around the 24.70 level. Elsewhere, the Polish zloty EURPLN= increased slightly by 0.15% and the Romanian leu EURRON= was mostly flat.

Equity markets followed global markets lower, under pressure from concerns about inflation and the possibility of a recession.

An outlier was the Czech utility CEZ CEZP.PRwhich continued to rebound from a loss of more than 10% on Monday, as the government feared to consider a tax on the energy sector.

Czech Prime Minister Petr Fiala said on Tuesday that the government does not want to introduce a windfall tax on energy companies, but wants to explore what form of solidarity these companies can bring to the rest of society.

CEE MARKETS

INSTANTANEOUS

At 10:14 a.m. CET

CURRENCIES

Last

Previous

Daily

To change

offer

close

change

in 2022

EURCZK=

Czech koruna

EURCZK=

24.7250

24.7350

+0.04%

+0.59%

EURHUF=

Hungarian forint

EURHUF=

396.0000

397.3000

+0.33%

-6.72%

EURPLN=

polish zloty

EURPLN=

4.6860

4.6930

+0.15%

-2.03%

EURRON=

lei in Romanian

EURRON=

4.9460

4.9435

-0.05%

+0.04%

EURHRK=

Croatian kuna

EURHRK=

7.5325

7.5325

+0.00%

-0.20%

EURRSD=

Serbian dinar

EURRSD=

117.4100

117.4500

+0.03%

+0.14%

Note: daily change

calculated from

1800 CET

Last

Previous

Daily

To change

close

change

in 2022

.PX

prague

.PX

1289.08

1293.0900

-0.31%

#ASSESS!

.BUX

Budapest

.BUX

40220.25

40481.51

-0.65%

-20.70%

.WIG20

Warsaw

.WIG20

1722.49

1739.08

-0.95%

-24.02%

.BETI

Bucharest

.BETI

12558.06

12570.66

-0.10%

-3.85%

.SBITOP

Ljubljana

.SBITOP

1139.86

1137.27

+0.23%

-9.21%

.CRBEX

Zagreb

.CRBEX

2028.96

2031.20

-0.11%

-2.42%

.BELEX15

Belgrade

.BELEX15

820.86

835.58

-1.76%

+0.01%

.SOFIX

Sofia

.SOFIX

611.95

611.48

+0.08%

-3.73%

Yield

Yield

Spread

Daily

(offer)

change

vs. Bunds

to change

Czech Republic

spread

CZ2YT=RR

2 years

CZ2YT=RR

6.3240

0.0580

+545bps

+14 basis points

CZ5YT=RR

5 years

CZ5YT=RR

5.6680

-0.1350

+431 basis points

-6bps

CZ10YT=RR

10 years

CZ10YT=RR

5.1160

-0.2040

+354bps

-15bps

Poland

PL2YT=RR

2 years

PL2YT=RR

7.7520

-0.0760

+688 bps

+0 basis points

PL5YT=RR

5 years

PL5YT=RR

7.5080

-0.0770

+615 basis points

+0 basis points

PL10YT=RR

10 years

PL10YT=RR

7.1240

-0.1730

+555 basis points

-11bps

FORWARD

3×6

6×9

9×12

3M interbank

Czech Republic

CZKFRAPRIBOUR=

7.64

7.63

7.36

7.22

Hungary

OYSTERBUBOR=

10.03

10.38

10.38

7.77

Poland

PLNFRAWIBOR=

8:15 a.m.

8.33

8.27

7.03

Note: ENG Quotes

are for asking prices

************************************************** **** ***********

(Reporting by Jason Hovet in Prague and Gergely Szakacs and Krisztina Than in Budapest. Editing by Jane Merriman)

((jason.hovet@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.