Currencies flit sideways, EU funds remain in focus

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WARSAW — Central European currencies

remained relatively stable on Friday while traders followed

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developments in the row between Warsaw and Brussels on the rule

of law, which is blocking Poland’s access to European Union

recovery funds.

The Polish zloty rose 0.1% to 4.6955 versus the

euro.

Poland’s government said on Tuesday it had agreed amendments

with Brussels amendments to a judiciary bill that would free up

billions in funds. The bill was due to be debated in parliament

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on Thursday, but was taken off the agenda after the country’s

president voiced concerns.

A deputy parliament speaker said it would probably be

debated at a sitting in January, after consultations with the

president and a junior coalition partner of the ruling Law and

Justice (PiS) party who is critical of the bill.

“The zloty remains stable within the range that has been in

force for over a month and we do not expect that to change

today,” Bank Millenium said in a report.

“We assume, however, that Thursday’s quite unexpected

decision to remove the law on the Supreme Court from the agenda

… means that the EUR/PLN exchange rate may move closer to the

upper limit of the horizontal trend, ie. 4.7070.”

Investors will also be watching the last Polish bond switch

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tender of the year at 1100 GMT.

Elsewhere, the forint was 0.2% stronger on the day

and trading at 406.550 per euro, still supported by a deal this

week with the EU over 5.8 billion euros ($6.15 billion) of

recovery funds.

The Czech crown was unchanged at 24.2550 per euro.

Both the National Bank of Hungary and Czech National Bank

will hold rate-setting meetings next week.

Morgan Stanley said it expected no change in rates in

Hungary on Tuesday, but “the deteriorating inflation outlook is

likely to keep the central bank leaning towards more tightening

should FX depreciation resume.”

In the Czech Republic, Morgan Stanley said it expected the

central bank to keep rates at their current level until the

third quarter of 2023, when it sees a first 25 basis points cut.

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Poland’s Monetary Policy Council (MPC) could cut rates in

2024, central banker Gabriela Maslowska said in an article

published on Friday, adding that it would be best to keep

borrowing costs stable for several months.

Stock markets in the region were mostly down, with blue-chip

indexes in Warsaw and Budapest falling more than

1% each.

CEE SNAPSHOT AT

MARKETS 0940

CET

CURRENCIES

Latest Previo Daily Change

us

bid close change in

2022

EURCZK Czech 0 % %

EURHUF Hungary 00 %

EURPLN Polish %

EURRON Romania %

EURHRK Croatia %

EURRSD Serbian 50 % %

Note: calculated from 1800

daily CET

change

Latest Previo Daily Change

us

close change in

2022

.PX Prague 1167.73 1171.3 -0.31%

400

.BUX Budapes 44315.57 44809. -1.10% -12.63

t 64 %

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.WIG20 Warsaw <.wig20> 2 %

.BETI Buchare 11915.25 11914. +0.01 -8.77%

st 53 %

.SBITO Ljublja <.sbito p na> 4 %

.CRBEX Zagreb <.crbex> 8 %

.BELEX Belgrad <.belex e> %

.SOFIX Sofia <.sofix> %

Yield Yield Spread Daily

(bid) change vs change

Bund in

Czech spread

Republi

c

CZ2YT= 0 ps

CZ5YT= ps

CZ10YT ps

Poland

PL2YT= ps

PL5YT= ps

PL10YT ps

FORWARD

3×6 6×9 9×12 3M

interb

ank

Czech

Hungary

Poland

Note: are for ask prices

FRA

quotes

********************************************

******************

($1 = 0.9424 euros)

(Reporting by Pawel Florkiewicz and Anna Wlodarczak-Semczuk in

Warsaw and Anita Komuves in Budapest; Editing by Sherry

Jacob-Phillips)