(Updates with Czech cenbank decision, analyst comments, market
reaction)
By Anita Komuves and Jason Hovet
BUDAPEST/PRAGUE, Nov 4 (Reuters) - The Czech crown extended
its gains on Thursday after the central bank delivered a
larger-than-expected rate hike amid soaring inflation, raising
its main rate above the level last seen before the pandemic.
The Czech National Bank raised its two-week repo rate
by 125 basis points to 2.75%, delivering a hike
that no analyts expected in a Reuters poll. The move comes after
a surprise 75-basis-point hike in September.
"The tightening cycle still has some way to go and the risks
to our view for rates to reach 3.25% in 2022 are firmly to the
upside," Liam Peach, economist at Capital Economics, wrote in a
note.
The crown jumped 0.3% immediately after the
decision and traded 0.41% stronger on the day at 25.43 versus
the euro at 1405 GMT, outperforming its regional peers, which
eased.
The market was pricing in a hike of about 100 basis points,
a trader in Prague said, which means that "125 basis points were
not that much of a surprise."
"It looks like rate hikes, even those bigger than expected,
do not have that much of an impact on exchange rates these
days."
The Polish zloty slid 0.13% to 4.6009 and was
still mildly in the red for the year, failing to benefit from
Wednesday's larger-than-expected 75 basis-point interest rate
hike by the central bank in Poland.
Based on the "the NBP projecting inflation to remain
persistently high in 2022 and 2023, we now expect a steeper and
more front-loaded hiking cycle that will put the NBP on the same
page with the rest of the CEE central banks," Morgan Stanley
said in a note.
The Hungarian forint eased 0.26% and was trading
at 359.95 per euro.
Central banks across Central Europe have been raising rates
since June amid a strong recovery from the coronavirus pandemic
to fend off a surge in inflation driven by global supply
bottlenecks and local factors such as tight labour markets.
CEE SNAPSHO AT
MARKETS T 1505 CET
CURRENC
IES
Latest Previous Daily Change
bid close change in 2021
EURCZK= Czech <EURCZK= 25.4300 25.5330 +0.41% +3.14%
crown >
EURHUF= Hungary <EURHUF= 359.950 359.0000 -0.26% +0.77%
forint > 0
EURPLN= Polish <EURPLN= 4.6009 4.5950 -0.13% -0.91%
zloty >
EURRON= Romania <EURRON= 4.9498 4.9495 -0.01% -1.71%
n leu >
EURHRK= Croatia <EURHRK= 7.5230 7.5183 -0.06% +0.33%
n kuna >
EURRSD= Serbian <EURRSD= 117.530 117.5800 +0.04% +0.03%
dinar > 0
Note: calculated from 1800
daily CET
change Latest Previous Daily Change
close change in 2021
.PX Prague 1360.72 1353.830 +0.51% +32.48
0 %
.BUX Budapes 55450.8 54914.54 +0.98% +31.69
t 1 %
.WIG20 Warsaw 2435.15 2380.11 +2.31% +22.74
%
.BETI Buchare 12913.5 12825.46 +0.69% +31.70
st 7 %
.SBITOP Ljublja <.SBITOP 1195.87 1188.68 +0.60% +32.75
na > %
.CRBEX Zagreb 2013.73 2017.34 -0.18% +15.78
%
.BELEX1 Belgrad <.BELEX1 793.73 798.25 -0.57% +6.03%
5 e 5>
.SOFIX Sofia 598.86 598.86 +0.00% +33.81
%
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republi
c
CZ2YT=R <CZ2YT=R 2.9010 0.0160 +362bp +7bps
R 2-year R> s
CZ5YT=R <CZ5YT=R 2.8150 0.0420 +336bp +11bps
R 5-year R> s
CZ10YT= <CZ10YT= 2.7240 0.0880 +293bp +13bps
RR 10-year RR> s
Poland
PL2YT=R <PL2YT=R 2.7510 0.4100 +347bp +47bps
R 2-year R> s
PL5YT=R <PL5YT=R 2.8300 0.1660 +337bp +24bps
R 5-year R> s
PL10YT= <PL10YT= 2.9110 0.0000 +312bp +4bps
RR 10-year RR> s
FORWARD
3x6 6x9 9x12 3M
interba
nk
Czech 3.68 3.69 3.73 2.22
Rep <PRIBOR=
>
Hungary 2.88 3.21 3.45 2.06
Poland 2.74 3.09 3.28 0.84
Note: are for ask
FRA prices
quotes
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(Editing by Subhranshu Sahu)