(Updates with Romanian cenbank decision, market reaction) By Anita Komuves and Luiza Ilie BUDAPEST/BUCHAREST, Oct 5 (Reuters) - The Romanian leu briefly firmed on Tuesday after the central bank hiked its benchmark interest rate to tackle rising inflation, but soon gave up gains as markets had already priced in the policy tightening. The central bank raised its main rate by a quarter point to 1.50% for the first time since the pandemic, as rising inflation outweighed a sharp rise in COVID-19 infections and an ongoing government crisis. The Romanian leu edged up after the rate hike, then retreated to earlier levels and was up 0.4% on the day, trading at 4.95 versus the euro. "The market appears to have priced it in," said Ciprian Dascalu, chief economist at Romania's BCR Bank. "The early hike should be positive for the long-end of the yield curve." Investors also eyed a vote in Romania's parliament that toppled the nine-month old minority government of Prime Minister Florin Citu by a large majority in a vote of no-confidence on Tuesday. "The backdrop of rising inflation, large twin deficits and currency weakness means that further rate hikes are likely to be delivered over the next 12 months or so," Capital Economics wrote in a note. The Polish zloty slid 0.01% to 4.5975 per euro, giving up some recent gains fuelled by growing rate hike expectations as data last week showed higher-than-expected inflation in September. The National Bank of Poland holds its next rate-setting meeting on Wednesday, where analysts expect no change in the base rate. However, some economists think there could be a hike before the end of the year. The Hungarian forint eased 0.04% to 356.90 per euro, retreating after gains that started on Friday when Deputy Central Bank Governor Barnabas Virag flagged further 15-basis-point rate hikes. Long-term Hungarian government bond yields were stable on Tuesday after rising about 10 basis points on Monday. Yields on the long end of the curve started to rise on Friday after Virag's comments that signalled the bank would continue to exit from its quantitative easing program, fixed-income traders in Budapest said. The yield on the 10-year bond was about 3.48%. Prague's equities outperformed the region and added 1.4% as Czech utility CEZ's shares continued to soar, hitting a fresh 9-year high as European wholesale power prices surge. CEZ shares were up 4.44% by 1300 GMT. CEE SNAPSHO AT MARKETS T 1459 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech <EURCZK= 25.3020 25.3590 +0.23% +3.66% crown > EURHUF= Hungary <EURHUF= 356.900 356.7400 -0.04% +1.63% forint > 0 EURPLN= Polish <EURPLN= 4.5975 4.5970 -0.01% -0.83% zloty > EURRON= Romania <EURRON= 4.9500 4.9520 +0.04% -1.72% n leu > EURHRK= Croatia <EURHRK= 7.5090 7.4923 -0.22% +0.51% n kuna > EURRSD= Serbian <EURRSD= 117.500 117.5800 +0.07% +0.06% dinar > 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1360.65 1341.870 +1.40% +32.47 0 % .BUX Budapes 53125.1 53234.94 -0.21% +26.17 t 4 % .WIG20 Warsaw 2349.86 2338.09 +0.50% +18.44 % .BETI Buchare 12625.8 12611.18 +0.12% +28.76 st 7 % .SBITOP Ljublja <.SBITOP 1164.79 1167.41 -0.22% +29.30 na > % .CRBEX Zagreb 2033.99 2027.35 +0.33% +16.94 % .BELEX1 Belgrad <.BELEX1 802.65 800.88 +0.22% +7.22% 5 e 5> .SOFIX Sofia 570.79 570.68 +0.02% +27.54 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c CZ2YT=R <CZ2YT=R 2.0970 0.0850 +281bp +9bps R 2-year R> s CZ5YT=R <CZ5YT=R 2.1450 0.0330 +272bp +3bps R 5-year R> s CZ10YT= <CZ10YT= 2.1410 0.0150 +236bp +1bps RR 10-year RR> s Poland PL2YT=R <PL2YT=R 0.9950 -0.1000 +171bp -9bps R 2-year R> s PL5YT=R <PL5YT=R 1.7040 0.0010 +228bp +0bps R 5-year R> s PL10YT= <PL10YT= 2.2540 -0.0270 +247bp -3bps RR 10-year RR> s FORWARD 3x6 6x9 9x12 3M interba nk Czech 2.73 2.98 3.13 1.83 Rep <PRIBOR= > Hungary 2.34 2.59 2.81 1.79 Poland 0.74 1.16 1.52 0.25 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Ramakrishnan M. and Maju Samuel)
Our Standards: The Thomson Reuters Trust Principles.