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CEE MARKETS-Crown firmer before likely Czech rate cut as FX rebound
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CEE MARKETS-Crown firmer before likely Czech rate cut as FX rebound
Nov 7, 2024 2:19 AM

PRAGUE, Nov 7 (Reuters) - The crown firmed before a

likely eighth straight interest rate cut from the Czech central

bank on Thursday as central Europeancurrencies rebounded from

losses coming after Donald Trump's U.S. presidential election

victory.

Hungary's forint recovered from its lowest levels in almost

two years, with a weaker dollar providing some room to gain.

Global markets, including in central Europe, were eyeing a U.S.

Federal Reserve rate meeting while still digesting the policy

implications of a Trump presidency.

In the Czech Republic, markets were positioned for a

continued rate-cutting cycle as the large majority of analysts

forecast a 25-basis-point reduction later on Thursday.

The bank has cut by a combined 275 basis points since last

December, and analysts expect more cuts next year. Policymakers

have said easing could continue but with caution.

"The question is how significantly (the central bank) will

rewrite (its update economic) forecast in a dovish direction and

how the board will also continue to accentuate several

pro-inflationary risks (like) high services inflation and a

weaker crown," bank CSOB said.

The crown was up 0.1% at 25.297 to the euro at

0941 GMT, back at levels seen before Wednesday when it fell to

25.450.

Among more-volatile peers, Hungary's forint gained

0.5% in morning trade to trade at 407.70 per euro, off a low of

412.50. Poland's zloty rose 0.25% to 4.344 per euro

after falling to 4.377, its lowest since June, in the previous

session.

Analysts expect central European currencies will continue to

face pressure in the coming period as markets look to what

policies that Trump, who made tariffs and tax cuts key elements

of his pitch to voters, will put in place and who will fill out

his team.

"With the eurozone generally under pressure, the threat of

tariffs and a stronger dollar cannot miss the CEE region and we

expect pressure on FX to resume," ING said.

It said the zloty could outperform peers, though, "due to a

reversal in short positioning, Poland's lower export and lower

automotive share, its stronger economy and the National Bank of

Poland still waiting on the sidelines with rate cuts."

Markets will watch Polish central bank Governor Adam

Glapinski later on Thursday when he gives no clues about the

bank's outlook after it left rates on hold on Wednesday, like it

has done since two initial cuts toward the end of 2023.

"Financial markets are settling into the reality of the new

U.S. president," Warsaw-based Bank Millennium said. "In our

opinion, investors may currently be moving into the 'buy rumors,

sell facts' phase, i.e. attempts to reverse current trends."

CEE SNAPSHOT AT

MARKETS 1041

CET

CURRENCIES

Latest Previo Daily Change

us

trade close change in 2024

Czech 0

Hungary 00

Polish Romania Serbian 00

Note: calcula 1800 CET

daily ted

change from

Latest Previo Daily Change

us

close change in 2024

Prague 1673.17 1665.4 +0.46% +18.33

300 %

Budapes 76415.80 75906. +0.67% +26.06

t 74 %

Warsaw 4

Buchare 17314.22 17281. +0.19% +12.64

st 07 %

Spread Daily

vs Bund change

in

Czech spread

Republi

c

0

0

0

Poland

0

0

0

FORWARD RATE

AGREEMENTS

3x6 6x9 9x12 3M

interba

nk

Czech Hungary Poland Note: are for

FRA ask

quotes prices

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