Strong dollar, U.S. inflation weigh on stocks, FX

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BUDAPEST — Most central European

currencies and stocks weakened on Monday, as a global negative

market mood and a strengthening dollar put pressure on assets in

the region with the Hungarian forint trading near its historic

lows versus the euro.

Soaring U.S. inflation data released on Friday fueled bets

that the U.S. Federal Reserve, which will meet on Wednesday,

could get more aggressive and deliver a bigger-than-expected

rate hike, which weighed on stocks and boosted the dollar.

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Stocks in Warsaw were 2.26% lower, while Prague’s

index was down 1.35%. Budapest’s equities were

2.32% weaker.

The forint was up 0.2% on the day at 397.30 per

euro after falling to 399.65 earlier in the morning, a

three-month low, and a whisker away from its historic low of

400.

“This sour international mood caught the forint at a time

when it was very weak already, and if that continues, it could

weaken past 400,” an FX trader in Budapest said.

“The high (budget) deficit, the low level of FX reserves and

the slowing of the central bank’s rate hikes will continue to

pressure the forint… the lack of good news about EU funds is

also not helping either.”

The forint has been the worst performer among its regional

peers so far in 2022, losing about 7% versus the euro so far.

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Elsewhere, the Polish zloty slid 0.24% to 4.6300

per euro as central banker Rafal Sura told Reuters the Monetary

Policy Council (MPC) could bring down the size of its next hike

in borrowing costs to 50 basis points in July.

This makes Sura the first MPC member to signal a less

hawkish stance after Governor Adam Glapinski also said last week

that Poland was approaching the end of its tightening cycle.

The Czech crown was flat after Central Bank

Governor Jiri Rusnok was quoted as saying by Pravo newspaper on

Saturday that the bank could raise its key interest rate by

50-100 basis points at its June 22 policy meeting.

“The market is fully pricing in a 125-bp hike with a

residual risk of more tightening coming in August, currently

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close to one more “standard.”.. 25 bps. In this light, Rusnok’s

comments … appear very conservative,” Komercni Banka trader

Marek Lesko wrote in a note.

Markets in Bucharest were closed for a holiday on Monday.

CEE SNAPSH AT

MARKETS OT 1053

CET

CURREN

CIES

Latest Previo Daily Change

us

bid close change in

2022

EURCZK Czech 0 0 %

EURHUF Hungary 00 00 %

EURPLN Polish

EURRON Romania %

EURHRK Croatia %

EURRSD Serbian 00 00 % %

Note: calculated from 1800

daily CET

change

Latest Previo Daily Change

us

close change in

2022

.PX Prague 1297.5 1315.2 -1.35%

2 900

.BUX Budapes 38045. 38950. -2.32% -24.99

t 85 67 %

.WIG20 Warsaw <.wig20> 5 8 %

.BETI Buchare 12354. 12354. +0.00 -5.41%

st 35 35 %

.SBITO Ljublja <.sbito p na> 1 5

.CRBEX Zagreb <.crbex> 0 9

.BELEX Belgrad <.belex e> %

.SOFIX Sofia <.sofix>

Yield Yield Spread Daily

(bid) change vs change

Bund in

Czech spread

Republi

c

CZ2YT= ps

CZ5YT= ps

CZ10YT ps s

Poland

PL2YT= ps s

PL5YT= ps s

PL10YT ps s

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 in Prague and Anna

Wlodarczak-Semczuk in Warsaw; Editing by Shailesh Kuber)