Forint leads CEE FX easing, market cautious ahead of cenbank meeting

3 minute read
Register now for FREE unlimited access to Reuters.com

BUCHAREST, Dec 13 (Reuters) - Central European currencies eased marginally on Monday, with the forint leading the region's losses in cautious trading, ahead of a rate-setting decision by Hungary's central bank and a European Central Bank meeting this week.

By 0940 GMT, the forint fell 0.25% to as low as 366.39 to the euro in low liquidity, followed by the Polish zloty , which traded at 4.6200, 0.1% down on the day.

"The meeting will be important to watch as the NBH (National Bank of Hungary) will revise its forecasts and will most likely deliver its forward guidance on the rates outlook for 2022," Morgan Stanley said in a note.

Register now for FREE unlimited access to Reuters.com

"We expect the NBH to signal that it will keep delivering a minimum of 30 basis points of hikes in the base rate, and consequently in the one-week depo rate until March 2022. We see the latter peaking at 4.60% in that month."

Last Thursday, the bank raised its one-week deposit rate by 20 basis points to 3.3% at its weekly tender, and a Reuters poll of analysts expects a 30 basis-point rise to 2.4%, continuing a series of hikes as it tries to curb inflation that rose to 7.4% in November, a 14-year-high. read more

Elsewhere, the Romanian leu was unmoved by latest consumer price inflation data that showed prices slowed marginally to 7.80% on the year in November, below expectations, from October's 7.94%, off a 13-year high.

"Our end-2021 CPI (Romanian inflation) projection of 7.1% year on year remains unchanged, though uncertainties related to the measurement of energy price subsidies are high," analysts at Erste Group said.

"We expect the National Bank of Romania to catch up with CEE peers and deliver a 50 basis point key rate hike to 2.25% at the next rate-setting meeting on 10 January."

The crown slipped 0.1% to 25.37 to the euro, and central bank Governor Jiri Rusnok told local newspaper Mlada Fronta Dnes on Saturday the board was not yet done raising interest rates, but there was no need for hikes as aggressive as in previous meetings. read more

He said a debate on a 25 or 50 basis-point move was likely when the bank meets next week. Another central banker, Tomas Holub, said over the weekend "higher-than-standard" hikes were still needed.

The Czech central bank stunned markets with a hike of 125 basis points to 2.75% in November. The next policy meeting is set for December 22.

Register now for FREE unlimited access to Reuters.com
Additional reporting by Anita Komuves in Budapest and Jason Hovet in Prague; Editing by Amy Caren Daniel

Our Standards: The Thomson Reuters Trust Principles.