Band Krisztina Than

BUDAPEST, October 8 (Reuters) – The Polish zloty weakened on Friday as central bank comments and escalating rule of law debate with the EU weighed in, while the forint also eased after data showed that Hungarian inflation had reached its highest level in nine years.

A Polish court ruled on Thursday that parts of European Union treaties were incompatible with the Polish constitution. The ruling challenges a pillar of European integration and deepens a dispute between Brussels and Warsaw, with the European Commission saying it raises serious concerns.

On Friday, the zloty traded 0.6% lower against the euro, while the forint EURHUF = fell by half a percent to around 360 to the euro. Czech crown EURCZK = was stable at 25.437 per euro with markets cautious before Czech voters went to the polls on Friday at 2:00 p.m. CET for parliamentary elections.

“The zloty remains under pressure from local factors,” Millenium Bank said in a note.

He said that while Wednesday’s surprise 40 basis point hike by the central bank in the benchmark rate to 0.5% had a positive impact on the currency, the “soft story” from the governor of Poland’s central bank Thursday and the court ruling could weaken it.

The zloty retreated from gains on Thursday after the governor of Poland’s central bank said policymakers would watch the effects of Wednesday’s interest rate hike for a long time and refused to engage in a tightening cycle.

The Czech and Hungarian central banks launched tightening cycles in June. Romania followed with a rate hike on Tuesday this week.

Headline inflation in Hungary HUCPIY = ECI jumped to 5.5% per year in September from 4.9% in August, reaching its highest level since October 2012, data released Friday.

According to some analysts, this could increase pressure on the Hungarian central bank to accelerate its political tightening. The bank raised its policy rate by 15 basis points to 1.65% in September, slowing the pace of tightening after consecutive 30 basis points in the previous three months. He reported increases of 15 basis points for the coming months.

“We maintain our base case for three more 15bp hikes in 4Q21, with the continued rise in energy prices creating upside risks to our call for the terminal (year-end) base rate at 2, 10%, ”Morgan Stanley said in a note.

Investors are also watching the Czech elections which start on Friday.

Voting booths close at 2 p.m. on Saturday in a close election between populist leader Andrej Babis and a group of opposition parties who accuse him of going into debt, mismanaging the coronavirus pandemic and mixing his business interests with those from the country.

CEEC MARKETS

INSTANTANEOUS

At 0952 CET

COINS

Latest

Previous

Daily

Switch

offer

close

cash

in 2021

EURCZK =

czech crown

EURCZK =

25.4370

25.4375

+ 0.00%

+ 3.11%

EURHUF =

Hungarian forint

EURHUF =

360.0400

358.3200

-0.48%

+ 0.74%

EURPLN =

Polish Zloty

EURPLN =

4.6050

4.5770

-0.61%

-0.99%

EURRON =

leu in Romanian

EURRON =

4.9480

4.9475

-0.01%

-1.68%

EURHRK =

Croatian Kuna

EURHRK =

7.5170

7.5153

-0.02%

+ 0.41%

EURRSD =

Serbian dinar

EURRSD =

117.4500

117.5500

+ 0.09%

+ 0.10%

Note: daily change

calculated from

1800 CET

STOCKS

Latest

Previous

Daily

Switch

close

cash

in 2021

.PX

Prague

.PX

1373.50

1366.2800

+ 0.53%

+33.72%

.BUX

Budapest

.BUX

53814.65

53844.59

-0.06%

+ 27.80%

.WIG20

Warsaw

.WIG20

2393.72

2359.54

+1.45%

+ 20.65%

.BETI

Bucharest

.BETI

12778.09

12743.60

+ 0.27%

+ 30.31%

.SBITOP

Ljubljana

.SBITOP

1166.13

1164.37

+ 0.15%

+ 29.45%

.CRBEX

Zagreb

.CRBEX

2036.65

2038.08

-0.07%

+ 17.10%

.BELEX15

Belgrade

.BELEX15

801.15

801.42

-0.03%

+ 7.02%

.SOFIX

Sofia

.SOFIX

567.70

566.84

+ 0.15%

+ 26.85%

OBLIGATIONS

Yield

Yield

Broadcast

Daily

(offer)

cash

against the Bund

switch

Czech Republic

broadcast

CZ2YT = RR

2 years

CZ2YT = RR

2.1130

0.0130

+281 bp

+ 1bps

CZ5YT = RR

5 years

CZ5YT = RR

2.1280

0.0100

+ 266bps

-1bps

CZ10YT = RR

10 years

CZ10YT = RR

2.1250

0.0160

+ 228bps

-2bps

Poland

PL2YT = RR

2 years

PL2YT = RR

1.4090

0.0230

+ 210bps

+ 2bps

PL5YT = RR

5 years

PL5YT = RR

2.0290

0.0620

+ 256bps

+ 4bps

PL10YT = RR

10 years

PL10YT = RR

2.4780

0.0460

+ 263bp

+ 1bps

ENG

3×6

6×9

9×12

3M Interbank

Czech Republic

CZKFRAPRIBOR =

2.79

3.07

3.16

1.89

Hungary

HUFFRABUBOR =

2.39

2.69

2.91

1.81

Poland

PLNFRAWIBOR =

1.33

1.85

2.23

0.63

Note: FRA quotes are for the prices requested

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

(Reporting by Krisztina Than, additional reporting by Jason Hovet in Prague, additional reporting by Pawel Florkiewicz in Warsaw; Editing by Krishna Chandra Eluri)

((krisztina.than@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.