Stocks, currencies fall on new variant worry; Czech rate hike bets cool

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BUDAPEST — Central European currencies and

stocks fell on Friday, hurt by a global risk-off mood triggered

by a newly identified coronavirus variant found in South Africa,

which prompted Asian and European countries to rush to tighten

restrictions.

Stock markets in the CEE region plunged, with Warsaw

leading losses, dropping 3.11%. Budapest was

2.03% lower, while Prague lost 1.37%. Bucharest

fell 2%.

Among currencies, the Czech crown led losses, down

0.86% and trading at 25.732 per euro.

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The crown was pressured by the negative market mood globally

as well as by dovish comments from the central bank governor on

Thursday, a currency trader in Prague said.

The Czech National Bank is in a comfortable position with

interest rates now and it can tighten policy further at a more

moderate pace, Governor Jiri Rusnok told Reuters on Thursday,

while also adding a pause at the bank’s December meeting was

also possible.

Rate markets also scaled back expectations for a December

rate hike, seeing a 25 basis point increase likely, down from

earlier pricing in almost 75 bps.

Czech President Milos Zeman was taken back to hospital on

Thursday after testing positive for the coronavirus, which means

he will not for the time being appoint center-right opposition

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leader Petr Fiala as prime minister.

A new coronavirus outbreak in the CEE region was also

worrying markets in the region. On Friday the Czech Republic

reported 27,717 new coronavirus cases, the highest daily tally

since the pandemic started.

The Hungarian forint was down 0.66% and was

trading at 367.63 per euro, giving up some of its gains from the

previous session when it firmed after the central bank hiked its

one-week deposit rate by 40 basis points to 2.9%.

“The hike could be enough to stop the forint from suffering

heavy losses, but the weakening continues,” an FX trader in

Budapest said. “The central bank cannot do anything about

outside factors, markets need to calm down for the forint to

gain.”

Long-term Hungarian government bond yields continued to drop

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on Friday after a fall in the previous session, while liquidity

was very low, a fixed-income trader said.

The yield on the 5-year bond was 4.25%, while the 10-year

yield was 4.20%. The yield on the 20-year bond was 4.10%.

The Polish zloty was 0.33% lower and was trading

at 4.6880 per euro.

Central Bank Governor Adam Glapinski said on Thursday that

the bank is ready to hike interest rates further to prevent

persistent elevated inflation.

CEE SNAPSH AT

MARKETS OT 1004

CET

CURREN

CIES

Latest Previou Daily Change

s

bid close hm in

2021

EURCZK Czech 25.732 25.5110 -0.86% +1.93

= crown 0 %

EURHUF Hungary 367.63 365.200 -0.66% -1.34%

= forint 00 0

EURPLN Polish 4.6880 4.6734 -0.31% -2.75%

= zloty

EURRON Romania 4.9497 4.9492 -0.01% -1.71%

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= n leu

EURHRK Croatia 7.5250 7.5225 -0.03% +0.30

= n kuna %

EURRSD Serbian 117.46 117.580 +0.10 +0.09

= dinar 00 0 % %

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change

s

close change in

2021

.PX Prague 1355.9 1374.77 -1.37% +32.0

9 00 2%

.BUX Budapes 51303. 52364.3 -2.03% +21.8

t 52 7 4%

.WIG20 Warsaw 2160.0 2229.44 -3.11% +8.87

3 %

.BETI Buchare 12353. 12607.3 -2.02% +25.9

st 26 0 8%

.SBITO Ljublja 1249.6 1250.09 -0.04% +38.7

P na 1 1%

.CRBEX Zagreb 1987.7 2004.90 -0.85% +14.2

9 9%

.BELEX Belgrad <.belex15 e> %

.SOFIX Sofia 621.77 627.19 -0.86% +38.9

3%

Yield Yield Spread Daily

(bid) change vs change

Bund in

Czech spread

Republi

c

CZ2YT= 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

FRA prices

quotes

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(Additional reporting by Jason Hovet and Robert Muller in

Prague; Editing by Shailesh Kuber)