CEE MARKETS-Forint jumps amid tight liquidity, markets eye EU budget talks

Anita Komuves
·4-min read

By Anita Komuves BUDAPEST, Dec 1 (Reuters) - Central European currencies firmed on Tuesday with the forint outperforming its peers and adding half a percent in an illiquid market as investors were eyeing developments in an European Union budget dispute between Brussels and Budapest. The Hungarian forint was up 0.53% on the day, trading at 357.40 versus the common currency by 1003 GMT. With no major news to move the currency on Tuesday its gains were likely due to a single bigger trade as liquidity was tight, two Budapest-based traders said. "The market is waiting for the next steps in the EU budget crisis," one trader said. Poland and Hungary are blocking about 1.8 trillion euros worth of EU funds, including hundreds of billions due to be disbursed soon to help pull the 27-country bloc out of a double-dip recession caused by a second wave of COVID-19. Ahead of next week's EU summit, their two prime ministers met in Warsaw on Monday after meeting in Budapest last week. The forint has underperformed its peers recently after Hungary and Poland pledged to veto the EU's budget and coronavirus rescue package because funds were tied to rule-of-law conditions. The Czech crown was up 0.22% and trading at 26.219 while the Polish zloty edged up 0.04% to 4.4775 per euro. The region posted fresh PMI and GDP data on Tuesday, showing the economic effects of the second wave of the pandemic which hit the region harder than the first. November PMIs in the region "confirmed a positive momentum and good robustness of the manufacturing," Erste Bank wrote in a note. Czech manufacturing business sentiment reached its highest point since August 2018, with the Markit Purchasing Managers' Index (PMI) coming in at 53.9. Poland's PMI for manufacturing reached 50.8 in November while Hungary's seasonally adjusted PMI rose to 51.9, the seventh-lowest reading for the month. Stock markets in the region firmed, with Warsaw leading gains by adding 1.41%. Budapest was up 0.89%, while Prague strengthened 0.25%. Markets in Romania were closed for a national holiday. CEE SNAPSHO AT MARKETS T 1103 CET CURRENC IES Latest Previous Daily Change bid close change in 2020 EURCZK= Czech <EURCZK= 26.2190 26.2770 +0.22 -3.00% crown > % EURHUF= Hungary <EURHUF= 357.400 359.2900 +0.53 -7.35% forint > 0 % EURPLN= Polish <EURPLN= 4.4775 4.4791 +0.04 -4.94% zloty > % EURRON= Romanian <EURRON= 4.8715 4.8732 +0.03 -1.71% leu > % EURHRK= Croatian <EURHRK= 7.5550 7.5532 -0.02% -1.45% kuna > EURRSD= Serbian <EURRSD= 117.530 117.5700 +0.03 +0.03 dinar > 0 % % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2020 .PX Prague 968.84 966.4400 +0.25 -13.16 % % .BUX Budapest 39127.7 38782.16 +0.89 -15.09 8 % % .WIG20 Warsaw 1855.83 1830.04 +1.41 -13.69 % % .BETI Buchares 9286.11 9286.11 +0.00 -6.93% t % .SBITOP Ljubljan <.SBITOP 888.85 888.22 +0.07 -4.00% a > % .CRBEX Zagreb 1695.32 1702.37 -0.41% -15.97 % .BELEX1 Belgrade <.BELEX1 713.81 713.57 +0.03 -10.96 5 5> % % .SOFIX Sofia 425.54 423.33 +0.52 -25.10 % % Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT=R 2-year <CZ2YT=R 0.1180 -0.0070 +086b -1bps R R> ps CZ5YT=R 5-year <CZ5YT=R 0.8240 -0.0270 +157b -4bps R R> ps CZ10YT= <CZ10YT= 1.2780 -0.0020 +183b -2bps RR 10-year RR> ps Poland PL2YT=R 2-year <PL2YT=R 0.0950 0.0220 +083b +2bps R R> ps PL5YT=R 5-year <PL5YT=R 0.4760 -0.0140 +122b -2bps R R> ps PL10YT= <PL10YT= 1.2740 0.0390 +183b +2bps RR 10-year RR> ps FORWARD 3x6 6x9 9x12 3M interb ank Czech 0.40 0.47 0.61 0.35 Rep <PRIBOR= > Hungary 0.69 0.69 0.69 0.75 Poland 0.22 0.22 0.22 0.22 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Alan Charlish and Anna Wlodarczak-Semczuk in Warsaw and Jason Hovet in Prague; Editing by Shailesh Kuber)