CEE MARKETS – Stocks, currencies weaken as global sentiment sours; forint wobbles

Krisztina Than BUDAPEST, May 19 (Reuters) – Central European currencies and stocks fell on Thursday as risk sentiment in global markets deteriorated and investors worried about an inflation storm, economic growth prospects and the Russia-Ukraine conflict. The Hungarian forint has been on a roller coaster ride, weakening again to 385 against the euro, a day after the currency emerged after Deputy Governor Barnabas Virag spoke out that Hungary needs positive real interest rates to curb inflation. rise. “Forint extended gains but was stopped by important resistance … and the euro failed to trade above 382.50 on the day’s close,” Equilor, a brokerage, said in a note. “This is a level to watch over the next few days…if the forint fails to manage to get past this level then it could start to weaken again.” The forint was down 0.4% against the euro by 0727 GMT , to 385, leading the decline in the region. As expected, Hungary’s central bank left its one-week deposit rate unchanged at 6.45% in its weekly tender on Thursday. The bank uses a one-week deposit rate to counter short-term market volatility. Late last month, the bank joined its central European peers in raising its benchmark interest rate by 100 basis points to 5.4 percent in response to soaring inflation. The Czech crown was down 0.1% at 24.692 against the euro. The central bank entered the market last week to intervene to stem a sharp decline as the country’s interest rate outlook faced uncertainty. Markets are expecting a sharp rate hike when Czech banks meet again in June, the last time they will sit under current board members before the new president, who, however, has called for an end to the sharp policy tightening of the past year. Poland and Romania kicked off bond sales on Wednesday, restarting offerings of emerging market sovereign bonds on international markets after a month-long hiatus. In Poland, the zloty was down 0.1% against the euro at 4.646. Stocks fell along with global peers, with Budapest leading losses by 2%. CEZ shares retreated on Thursday, falling more than 1 percent, after rising 8 percent in the previous session on speculation the Czech-majority state-owned utility could undergo a restructuring. The Czech finance ministry said on Wednesday that restructuring was an option CEZ was analyzing, a repeat of an idea the previous government put on hold in 2018-19. “While no details were provided, the fact that this possibility is being considered should support shares in the coming days,” J&T Banka said in a note. CEE SNAPSHOT AT MARKETS 0923 CET CURRENCI ES 2022 Last Daily Change Close Price Change EURCZK Czech 24.6920 24.6600 -0.13% +0.73% = Crown EURHUF Hungary 385.0000 383.5000 -0.39% -4.05% = Forint EURPLN Poland 4.108 -54 4 % = zloty EURRON Romanian n/a 4.9480 n/an/a = leu EURHRK Croatian 7.5350 7.5345 -0.01% -0.23% = kuna EURRSD Serbian 117.4100 117.4800 +0.06% +0.14% = Dinar Note: Based on daily CET Change 1800 Calculates daily closing price change for 2022. PX Prague 1331.76 1339.070 -0.55% #VALUE! 0 .BUX Budapest 42012.89 42896.59 -2.06% -17.17% .WIG20 Warsaw 1770.86 1801.68 -1.71% -21.88% .BETI Buchares 11961.23 12093.12 -1.09% -8.42% t .SBITO Ljubljan 1130.59 1135.97 -0.47% -9.95% P a .CRBEX Zagreb 2080.30 2080.30 +0.00% +0.05% .BELEX Belgrade <.BELEX15 820.02 820.02 +0.00% -0.09% 15 > .SOFIX Sofia 616.05 616.05 +0.00% -3.09% Yield spread daily (bid) change vs Czech bond change Republic CZ2YT= 2 years CZ5YT= 5 years CZ10YT s Poland PL2YT= 2 years PL5YT= 5 years PL10YT s FORWARD 3×6 6×9 9×12 3M interbank Czech Republic < 6.84 6.78 6.46 6.04 Rep PRIBOR=> Hungary < 7.91 8.35 8.34 6.81 BUBOR=> Poland < 7.18 7.27 7.24 6.45 WIBOR=> Note: Quoted for asking price FRA ************************* ***************** ****** ************* (Additional reporting by Jason Hovet in Prague; Editing by Sherry Jacob-Phillips)

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