Weaker dollar ahead of US Fed decision props up CEE FX
WARSAW, Sept 16 (Reuters) -The forint continued to firm on Monday as a weaker dollar ahead of the U.S. rates decision boosted emerging market assets including Central Eastern European currencies.
Markets are increasingly expecting an oversized 50-basis-point rate cut by the Federal Reserve later this week, putting pressure on the dollar and boosting investors' risk appetite for riskier assets.
By 1002 GMT, the Hungarian forint EURHUF= was up 0.1% against the euro to 394.20, firming for a fourth session straight to erase losses from early last week.
"I think what is really important here is the dollar weakening ahead of the FOMC decision this Wednesday," Peter Virovacz, senior economist at ING in Budapest, said.
"A bigger and bigger share of market players are expecting a 50 basis point rate cut by the Fed and...this is possibly spilling into the weaker dollar and generally improving outlook for the whole CEE region from an FX perspective."
He called the forint's move against the euro "the usual zigzagging between 393-398", adding that the Fed's decision could have implications for the Hungarian National Bank, which holds a policy decision meeting next week.
In Poland, the zloty EURPLN= also firmed 0.1% to 4.2740 per euro, returning to levels from early last week.
"It is possible that the zloty will weaken this week. The FOMC meeting will be the key event. In the case of a small rate cut by 25bps...the dollar could strengthen with a negative impact on CEE currencies," Santander Bank Polska wrote in a note.
The Czech crown EURCZK= traded 0.1% higher at 25.1350 per euro, hovering near its lowest levels since late August.
CEE MARKETS | SNAPSHOT | AT 1202 CET | |||
CURRENCIES | |||||
Latest | Previous | Daily | Change | ||
trade | close | change | in 2024 | ||
Czech crown | EURCZK= | 25.1350 | 25.1540 | +0.08% | #VALUE! |
Hungary forint | EURHUF= | 394.2000 | 394.6300 | +0.11% | #VALUE! |
Polish zloty | EURPLN= | 4.2740 | 4.2791 | +0.12% | #VALUE! |
Romanian leu | EURRON= | 4.9740 | 4.9739 | -0.00% | #VALUE! |
Serbian dinar | EURRSD= | 116.9500 | 117.0500 | +0.09% | #VALUE! |
Note: daily change | calculated from | 1800 CET | |||
Latest | Previous | Daily | Change | ||
close | change | in 2024 | |||
Prague | .PX | 1575.19 | The unexpected error occurs during parsing the formula. | #VALUE! | #VALUE! |
Budapest | .BUX | 72910.66 | 72075.48 | +1.16% | #VALUE! |
Warsaw | .WIG20 | 2303.93 | 2330.89 | -1.16% | #VALUE! |
Bucharest | .BETI | 17497.86 | 17477.86 | +0.11% | #VALUE! |
Spread | Daily | ||||
vs Bund | change in | ||||
Czech Republic | spread | ||||
2-year | CZ2YT=RR | 3.2390 | -0.1370 | +101bps | -16bps |
5-year | CZ5YT=RR | 3.4260 | 0.0270 | +139bps | +1bps |
10-year | CZ10YT=RR | 3.6850 | -0.0620 | +153bps | -7bps |
Poland | |||||
2-year | PL2YT=RR | 4.6170 | -0.0220 | +239bps | -4bps |
5-year | PL5YT=RR | 4.9810 | -0.0070 | +295bps | -2bps |
10-year | PL10YT=RR | 5.2730 | -0.0140 | +312bps | -2bps |
FORWARD | |||||
3x6 | 6x9 | 9x12 | 3M interbank | ||
Czech Rep | CZKFRAPRIBOR= | 3.83 | 3.44 | 3.11 | 4.32 |
Hungary | HUFFRABUBOR= | 6.10 | 5.61 | 5.07 | 6.47 |
Poland | PLNFRAWIBOR= | 5.73 | 5.27 | 4.68 | 5.85 |
Note: FRA quotes | are for ask prices | ||||
************************************************************** | |||||
Reporting by Karol Badohal in Warsaw; Editing by Shreya Biswas
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