UPDATE 2-Czech, Polish central banks jump into markets as currencies fall

(Changes slug to wrap in Poland, Hungary central banks)

PRAGUE/WARSAW, March 4 (Reuters) - The Czech National Bank followed the Polish central bank in intervening on Friday to prop up its currency, as central European policymakers try to shore up markets coming under heavy pressure after Russia’s invasion of Ukraine.

The Polish central bank coordinated its intervention on Friday with its Czech counterpart, a source close to the bank told Reuters.

The Czech bank had said earlier that “it is active on the foreign exchange market and is conducting operations to mitigate excessive fluctuations and depreciation of the crown.”

The Czech action bucked up the crown, which traded up 0.7% on the day at 25.615 to the euro after the announcement. Poland’s zloty, though, was down 0.9% at 4.845 at 1035 GMT, staying under pressure along with the Hungarian forint .

Central Europe has been facing fallout since Russia began its invasion of Ukraine on Feb. 24, prompting harsh Western sanctions on Moscow, shaking up global markets and driving investors into safer assets.

The crown had lost as much as 5% to hit a 10-month low near 26 to the euro this week, while the zloty plumbed 13-year depths and the forint touched new record lows.

“(The intervention) is a clear signal from the (Czech) central bank that further weakening of the crown would not be comfortable for them,” Komercni Banka economist Michal Brozka said. “It is also a signal that further weakening of the crown is not likely.”

The Czech bank has large reserves built up between 2013 and 2017, when it bought foreign currency to keep the crown weak. Reserves amounted to around 66% of gross domestic product at the end of January.

The National Bank of Poland had already said twice this week it had sold foreign currency for zlotys.

Hungary’s central bank (NBH) declined to comment on Friday whether it was intervening in markets, but it added that: “it is ready to step in using all the elements of its toolkit to ensure the stability of local financial markets”.

On Thursday, the Hungarian bank raised its one-week deposit rate by 75 basis points, the biggest increase since 2008.

Policymakers around central Europe have already sharply raised interest rates since last year to battle surging inflation, which is set to go higher amid a rise in energy prices resulting from the conflict in Ukraine.

High prices are also seen hitting consumers and slowing growth. (Reporting by Jason Hovet and Robert Muller in Prague, Justyna Pawlak in Warsaw, and Krisztina Than in Budapest, writing by Jason Hovet; editing by John Stonestreet and Hugh Lawson)