BUDAPEST/PRAGUE, March 28 The Czech crown
was at a three-month-high in future deals on Tuesday
as markets readied for an expected removal of an exchange rate
Hungary's forint was stable ahead of Tuesday's
interest rate decision.
To fight deflation risks, the Czech central bank introduced
a cap in late 2013 to keep the crown weaker than 27 against the
euro in the spot market .
But with price growth back to normal, most analysts expect
an exit from the "weak crown" regime in April or May.
Strong interest in crown forwards up to a one-month maturity
sent the crown to a three-month-high at 26.93 per
euro in early trade, extending gains from Monday according to
"On Thursday the board members of the Czech National Bank
meet for the last time before the end of the hard commitment,"
analysts at Raiffeisen Bank said in a note.
"The hard commitment to defend the Czech currency at the
limit EUR/CZK 27 or above ends this Friday and after this
'anything can happen'," the analysts said.
In Hungary, where inflation has also approached the central
bank's policy anchor, the Monetary Council holds a rate-setting
meeting later in the day where it is widely expected to keep the
base rate at a record-low 0.9 percent.
However, central Europe's most dovish central bank could
announce a further reduction in the amount of funds commercial
banks can keep in its 3-month deposits as it seeks to loosen
monetary conditions with targeted unconventional measures.
The forint was nailed to the 309 per euro mark in early
"The question is how much further the 3-month stock will be
lowered, as well as the new inflation and economic growth
forecasts," a Budapest-based currency dealer said.
"If there is a bigger change, that could spark some
activity, but I expect the usual communication," the trader
The bank will announce its rate decision at 1200 GMT,
followed by new economic forecasts and the size of the
three-month deposits at 1300 GMT.
The median projection of analysts polled by Reuters sees a
150 billion forint cut in the 3-month deposit limit for the end
of June, to 600 billion forints, after an earlier cut to 750
billion forints by the end of this month.
CEE MARKETS SNAPSHOT AT 0937 CET
Latest Previous Daily Change
bid close change in 2017
Czech crown 27.0200 27.0190 +0.00% -0.05%
Hungary 309.1000 309.1000 +0.00% -0.09%
Polish zloty 4.2520 4.2448 -0.17% 3.57%
Romanian leu 4.5520 4.5538 +0.04% -0.37%
Croatian 7.4300 7.4385 +0.11% 1.68%
Serbian 123.8600 123.9500 +0.07% -0.41%
Note: daily calculated previous close at 1800 CET
Latest Previous Daily Change
close change in 2017
Prague 984.59 979.45 +0.52% +6.83%
Budapest 32123.67 31876.22 +0.78% +0.38%
Warsaw 2213.96 2201.88 +0.55% +13.66%
Bucharest 7959.27 7961.02 -0.02% +12.34%
Ljubljana 782.64 791.11 -1.07% +9.07%
Zagreb 2094.72 2096.80 -0.10% +5.01%
Belgrade 743.14 744.49 -0.18% +3.59%
Sofia 638.50 638.34 +0.03% +8.88%
Yield Yield Spread Daily
(bid) change vs Bund change in
2-year -0.491 0 +020bps +0bps
5-year 0.211 0.065 +051bps +7bps
10-year 0.979 -0.009 +058bps +0bps
2-year 2.041 -0.008 +273bps -1bps
5-year 2.959 0.022 +326bps +3bps
10-year 3.543 0.006 +314bps +1bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech Rep <PRI 0.29 0.33 0.4 0
Hungary <BUB 0.27 0.34 0.46 0.21
Poland <WIB 1.77 1.785 1.825 1.73
Note: FRA are for ask
(Writing by Gergely Szakacs; Editing by Jeremy Gaunt)