Band Anita Komuves

BUDAPEST, May 26 (Reuters) – The Hungarian forint extended its losses and shares fell on Thursday as investors awaited details of new windfall taxes on banks and large private companies as the government aims to contain a soaring budget deficit.

Prime Minister Viktor Orban announced on Wednesday that banks and companies that make “additional profits” will have to contribute to the costs of army reinforcements and to fund caps on household energy bills.

the forint EURHUF= was down 1.71% at 394.90 per euro, while the Budapest stock index .BUX lost 4.76%.

Blue chip stocks tumble, with oil and gas group MOL MOLB.BU and OTPs OTPB.BU plunging more than 10% at the start of the session. As of 0831 GMT, shares recouped some losses but were still down sharply.

“The key question is how much money the government wants. If they want to fund the energy bill price cap entirely from these taxes, that’s a huge amount and the markets will be under even more pressure” , said a Budapest-based forex trader.

“If the amount is less than that and the government is also willing to tighten its belt, it might help balance the budget and investors might accept that.”

Details of the exceptional taxes, which will be applied in 2022 and 2023, were due to be announced at a press conference at 12:30 GMT.

Yields on long-term government bonds rose about 20 basis points amid low liquidity, two fixed-income traders said. The yield on the 10-year bond was around 7.05%.

“We are taking a break from the initial morning rally, but investors are watching the forint and if it breaks above 400 to the euro, yields could climb higher,” one trader said.

“If the central bank raised the deposit rate to one week this morning, that might have calmed the nerves a bit.”

The bank left the rate unchanged at 6.45% on Thursday. It uses the one-week deposit rate to solve short-term liquidity problems.

Elsewhere, the Polish zloty EURPLN= firmed 0.14% to 4.6025 against the common currency. The Czech crown EURCZK= was 0.12% higher and traded at 24.660 per euro.

The Czech central bank must keep interest rates above standard levels, support the government in reducing budget deficits and urge wage moderation, new governor Ales Michl said in an interview with Ekonom magazine.

CEE MARKETS

INSTANTANEOUS

At 10:31 a.m. CET

CURRENCIES

Last

Previous

Daily

To change

offer

close

change

in 2022

EURCZK=

Czech koruna

EURCZK=

24.6600

24.6900

+0.12%

+0.86%

EURHUF=

Hungarian forint

EURHUF=

394.9000

388.1500

-1.71%

-6.46%

EURPLN=

polish zloty

EURPLN=

4.6025

4.6090

+0.14%

-0.25%

EURRON=

lei in Romanian

EURRON=

4.9432

4.9410

-0.04%

+0.10%

EURHRK=

Croatian kuna

EURHRK=

7.5340

7.5335

-0.01%

-0.22%

EURRSD=

Serbian dinar

EURRSD=

117.4700

117.5000

+0.03%

+0.09%

Note: daily change

calculated from

1800 CET

Last

Previous

Daily

To change

close

change

in 2022

.PX

prague

.PX

1314.98

1312.4400

+0.19%

.BUX

Budapest

.BUX

39542.13

41517.26

-4.76%

-22.04%

.WIG20

Warsaw

.WIG20

1811.99

1796.58

+0.86%

-20.07%

.BETI

Bucharest

.BETI

12278.31

12206.59

+0.59%

-5.99%

.SBITOP

Ljubljana

.SBITOP

1139.79

1142.16

-0.21%

-9.21%

.CRBEX

Zagreb

.CRBEX

2086.97

2091.03

-0.19%

+0.37%

.BELEX15

Belgrade

.BELEX15

817.11

819.40

-0.28%

-0.45%

.SOFIX

Sofia

.SOFIX

609.78

608.21

+0.26%

-4.07%

Yield

Yield

Spread

Daily

(offer)

change

vs. Bunds

to change

Czech Republic

spread

CZ2YT=RR

2 years

CZ2YT=RR

5.4700

-0.0290

+518 basis points

+1 basis points

CZ5YT=RR

5 years

CZ5YT=RR

4.9100

-0.0420

+431 basis points

+1 basis points

CZ10YT=RR

10 years

CZ10YT=RR

4.5630

-0.0860

+367 basis points

-4bps

Poland

PL2YT=RR

2 years

PL2YT=RR

6.3170

-0.0040

+603 basis points

+4 base points

PL5YT=RR

5 years

PL5YT=RR

6.8250

0.0420

+623bps

+10 basis points

PL10YT=RR

10 years

PL10YT=RR

6.5920

0.0430

+569bps

+9 basis points

FORWARD

3×6

6×9

9×12

3M interbank

Czech Republic

CZKFRAPRIBOUR=

6.82

6.72

6.47

6.11

Hungary

OYSTERBUBOR=

7.88

8.25

8.11

6.81

Poland

PLNFRAWIBOR=

7.54

7.73

7.70

6.51

Note: ENG Quotes

are for asking prices

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

(Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Rashmi Aich)

((komuves.anita@thomsonreuters.com)(+36 70 795 8815))

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