Crown firms after central bank intervenes in forex market

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BUDAPEST, March 4 (Reuters) - The Czech crown gained on Friday and the Polish zloty firmed briefly after both their central banks intervened in the market to shore up the currencies, as CEE markets were again hammered by the latest news on Russia's invasion of Ukraine.

Central European currencies have been hit hard by the war in Ukraine as investors flee to safer assets, pushing central banks in the Czech Republic and Poland into action to cap their currencies' losses.

A fire at Europe's biggest nuclear power station in Ukraine had sent world financial markets tumbling earlier. The fire was extinguished and officials said the plant was operating normally, after being seized by Russian forces. read more

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The Czech crown was up 0.64% on the day, trading at 25.635 per euro after the central bank said it was in the foreign exchange market and was acting to mitigate excessive fluctuations.

The Polish zloty was still 0.68% weaker on the day and trading at 4.8360 to the euro, after some gains earlier in the morning.

A source close to the National Bank of Poland told Reuters the bank was intervening in a move coordinated with the Czech central bank.

The Hungarian forint traded at 382.00 per euro, down 0.47% from Thursday, after hitting another record low at 383 earlier in the day.

The National Bank of Hungary delivered its biggest rate hike since 2008 on Thursday when it raised its one-week deposit rate, used to tackle short-term market volatility, by 75 basis points to 5.35%. read more

Like the crown and zloty, the forint pulled back from its deep losses, but some analysts said the central bank might need to do more to shore up the currency.

"The central bank did not achieve a significant change in the forint's rate with yesterday's hike of the one-week deposit rate," brokerage Equilor wrote.

On Friday the NBH reiterated that it was ready to act to ensure the stability of the local financial market.

In a Reuters poll on Friday analysts predicted an uncertain path to recovery for CEE currencies in the next 12 months.

The forint was seen as recovering the slowest among peers while the Czech crown and Polish zloty were expected to recover to levels on par with previous forecasts from a month ago.

Stocks in the region fell, with Bucharest leading losses as it was down 5.14%. Budapest's equities were 1.91% lower.

Hungary's OTP Bank's shares were down 1.27% by 0959 GMT. The bank reported fourth-quarter profit that missed expectations and its CEO told a news conference that the bank planned to stay in Russia and Ukraine for the long term. OTP's stock lost about a third of its value since Russia invaded neighbouring Ukraine. read more

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Writing by Anita Komuves; Editing by Hugh Lawson

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