MARKETS CEE-Forint, shares fall as investors await details of windfall tax in Hungary
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))
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