CEE MARKETS forint hits eight-week low as c.bank shifts interest rate hikes to a lower gear

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By Gergely Szakacs BUDAPEST, Sept. 24 (Reuters) – Hungary’s forint hit an eight-week low against the euro on Friday and extended its losses for a third straight session after the central bank slowed rate hikes despite theirs Had raised inflation forecasts. At 0801 GMT, the forint lost 0.3%, leading to losses in Central Europe and giving up much of its year’s gains. Both the Hungarian and Czech central banks started raising rates in June, raising the forint and krona by about 3% against the euro ahead of Tuesday’s Hungarian interest rate meeting, when the bank raised rates by less than 15 basis points to 1 , 65 raised%. Despite raising its inflation forecast for this year and next, the Hungarian National Bank (NBH) announced that it would continue to raise interest rates in steps of 15 basis points, thereby slowing the rate of rate hikes by 30 basis points after three consecutive increases. The forint has fallen over 1% against the euro since Tuesday and has reduced its annual gains to 1.6%. The krone’s gains still top 3% this year as the debate among Czech interest rate setters shifts towards a faster tightening. “The NBH is in a tight spot as it has to keep raising rates due to high inflation, but they cannot raise too much as it could create a backlash,” said a forex trader in Budapest. “The elections are imminent, a lot of people are in debt and big rate hikes probably wouldn’t be good news for them,” the trader said, adding that potential spillover risks from the Evergrande crisis and rising energy prices also weighed on sentiment. Earlier on Friday, Hungarian Prime Minister Viktor Orban said he wanted to hasten an extra month of payments to retirees as it fueled a pre-election spending spree ahead of what is likely to be the highly competitive election early next year. Last week, Orban also relaxed repayment rules for retail credit card loans and overdrafts as part of an extended debt moratorium, which means that banks are charging lower interest rates on such loans. The Polish zloty lost 0.2% in early trading while the koruna was 0.1% weaker. Budapest stocks also lagged the region with a 0.45% decline as all blue chip stocks were slightly in the red. CEE SNAPSHO AT MARKETS T 1001 CET CURRENCIES Last previous daily change s Bid change in 2021 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 Note: Calculated from 1800 daily CET change Last previous daily change s Final change in 2021 .PX Prague 1308.80 1307.55 +0.10% +27.42 00% .BUX Budapest 51714.4 51946.8 -0.45% +22.82 7 6% .WIG20 Warsaw <.wig20> % .BETI Bukares 12,476.3 12,395.2 +0.65% +27.24 t 5 8% .SBITO Ljubljan <.sbito p a> % .CRBEX Zagreb <.crbex> % .BELEX Belgrade <.belex> .SOFIX Sofia <.sofix> % Yield Yield Spread Daily (monetary) change compared to the Bund Change in the Czech Spread Republic CZ2YT = 2 years s CZ5YT = 5 years s CZ10YT s Poland PL2YT = 2 years s PL5YT = 5 years s PL10YT s FORWARD 3×6 6×9 9×12 3M interba nk Czech Republic Hungary Poland Note: are for FRA prices on request ************ *************************** *** ****************** (reporting by Gergely Szakacs; editing by Rashmi Aich)

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