Forint pares losses after surprise cbank tightening

Article content

BUDAPEST — Hungary’s forint

rallied about 1% from record lows near 370 versus the euro on

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Forint pares losses after surprise cbank tightening Back to video

Wednesday after the central bank announced a new one-week

deposit tender available to banks at its 0.9% base rate.

Central Europe’s worst performing currency in 2020 was still

down 1% on the day at 365 versus the euro at 1404 GMT, but the

bank’s surprise announcement, representing a tightening of

monetary policy, helped provide a floor.

The region’s stock markets and currencies weakened on

Wednesday, with the Hungarian forint tumbling to a record low

versus the euro as PMI data across the region fueled worries of

a deep recession caused by the coronavirus pandemic.

The forint plunged to new record lows past 369 versus the

euro earlier in the session and underperformed the region’s

other currencies.

Market players said the underperformance was due to a

combination of several factors, including dismal PMI data and

the Hungarian government’s move to secure open-ended special

rights to fight the coronavirus that triggered a fresh wave of

worries over democracy.

The Hungarian currency has lost more than 9% of its value to

the euro this year.

Hungary’s seasonally adjusted PMI fell to 29.1 in March from

a revised 50.3 in February.

A Budapest dealer said that one or two banks were heavily

trying to buy foreign currency on Tuesday, dollars and euros.

“The forint has been weakening since Parliament gave the

government the right to rule by decree on Monday,” another

Budapest-based dealer said.

Elsewhere, the Polish zloty was down 0.62% to

trade at 4.5783 to the euro, while the Czech crown

eased 0.26% to 27.390 against the euro. The Romanian leu

was steady, trading at 4.833.

The Czech Finance Ministry sold a record 87.4 billion crowns

($3.50 billion) of three bonds at auctions on Wednesday,

following up on massive debt sales last week as it accelerates

borrowing to combat the coronavirus outbreak.

The Czech National Bank (CNB) cut interest rates by 125

basis points to 1.00% in two steps over 10 days in March and

markets are betting on further cuts to come, which is spurring

bond demand.

Manufacturing activity in Poland, the region’s largest

economy, declined in March at the fastest rate since the 2008

global financial crisis. The IHS Markit PMI fell to 42.4 from

48.2 in February.

Czech manufacturing business sentiment also plunged, to the

lowest since May 2009.

CEE SNAPSHO AT

MARKETS T 1604

CET

CURRENC

IES

Latest Previou Daily Change

s

bid close change in 2020

EURCZK Czech

EURHUF Hungary 0 0

EURPLN Polish

EURRON Romanian

EURHRK Croatian

EURRSD Serbian 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change

s

close change in 2020

.PX Prague 771.25 789.880 -2.36% -30.87%

.BUX Budapest 32473.5 33134.8 -2.00% -29.53%

0 7

.WIG20 Warsaw

.BETI Buchares 7432.81 7625.38 -2.53% -25.50%

t

.SBITO Ljubljan

.CRBEX Zagreb

.BELEX Belgrade

.SOFIX Sofia

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year s

CZ5YT= 5-year s

CZ10YT s

Poland

PL2YT= 2-year s

PL5YT= 5-year s

PL10YT s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech

Hungary

Poland

Note: are for ask

FRA prices

quotes

(Additional reporting by Jan Lopatka in Prague; Editing by Jan

Harvey and Elaine Hardcastle)