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UPDATE 1-CEE MARKETS-Forint firms after cenbank hikes rates by 30 basis points

·3-min read

(Updates with cenbank decision, forint reaction) By Anita Komuves BUDAPEST, July 27 (Reuters) - The Hungarian forint firmed, rebounding from three-month lows after the central bank hiked its base rate by 30 basis points to 1.2%, above forecasts, opting to front-load its tightening cycle that it started last month in order to fight inflation. The bank also raised its overnight deposit rate by 30 basis points to 0.25% and the collateralised loan rate by 30 basis points to 2.15%. The bank will hold an online news conference at 1300 GMT. "The forint is firming because this looks pretty hawkish, a 30 basis-point hike was the top of expectations. I don't think anyone expected a bigger hike than this," a Budapest-based trader said. The forint was up 0.68% on the day and trading at 359.17 per euro by 1224 GMT. This level is more than half a percent stronger than the 361 level where the currency was trading immediately before the rate hike was announced. A Reuters poll of analysts expected the National Bank of Hungary (NBH) to raise its base rate by 20 basis points to 1.1%. The currency has been pressured in the past month by a weakening global sentiment in financial markets and debates between the Hungarian government and the EU over the disbursement of recovery funds. Higher-than-expected June inflation also put a pressure on the forint. Hungary's headline inflation rate accelerated to an annual 5.3% in June from 5.1% in May, its highest in nearly a decade. Commerzbank expects a 1.50% policy rate by the end of the NBH's tightening cycle. "It would not matter much for the EUR-HUF exchange rate whether this is implemented in four 15bp steps, or a more front-loaded combination of 30bp steps. In any case, 1.50% rate would not be high enough to produce a stable exchange rate when inflation is running at 5%," Commerzbank analysts wrote. Elsewhere, the Czech crown edged up 0.01% to 25.6800 per euro and the Polish zloty added 0.1% and was trading at 4.5895 as the global risk-off mood kept pressuring currencies in the region. Most stocks in the region fell, with Warsaw leading losses with a 0.88% decline. CEE SNAPSHO AT MARKETS T 1424 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech EURHUF= Hungary 0 EURPLN= Polish EURRON= Romania EURHRK= Croatia EURRSD= Serbian 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1197.27 1198.420 -0.10% +16.56 0 % .BUX Budapes 46995.5 46952.76 +0.09% +11.61 t 0 % .WIG20 Warsaw 2220.92 2240.65 -0.88% +11.94 % .BETI Buchare 11918.7 11964.20 -0.38% +21.55 st 5 % .SBITOP Ljublja <.SBITOP 1142.05 1141.80 +0.02% +26.77 na > % .CRBEX Zagreb 1933.10 1929.65 +0.18% +11.14 % .BELEX1 Belgrad <.BELEX1 776.52 775.00 +0.20% +3.73% 5 e 5> .SOFIX Sofia 565.40 568.39 -0.53% +26.34 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c CZ2YT=R s CZ5YT=R s CZ10YT= s Poland PL2YT=R s PL5YT=R s PL10YT= s FORWARD 3x6 6x9 9x12 3M interba nk Czech 1.21 1.54 1.73 0.71 Rep Hungary 1.72 1.95 2.02 1.07 Poland 0.28 0.37 0.48 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Anita Komuves; Editing by Susan Fenton and Giles Elgood)

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