CEE MARKETS-Forint pares gains as cenbank raises inflation forecast

By Anita Komuves BUDAPEST, June 30 (Reuters) – The Hungarian forint weakened on Thursday, but it held on to most of its significant gains from the previous sessions as the central bank raised its one-week deposit rate by 50 basis points. The forint slid 0.58% to 396.7 per euro on Thursday, but still trading about 2% stronger than on Monday when it hits a record low at 404.5 versus the euro. The currency jumped after the central bank raised its base rate on Tuesday by a whopping 185 basis points to 7.75%, the highest rate in the region, as it fights soaring inflation. The National Bank of Hungary (NBH) sees tax-adjusted core inflation, its preferred measure of lasting price trends, rising to 13% to 14% this year from 7.9% to 9.4% projected three months ago, it said in its quarterly inflation report on Thursday. On Thursday, the bank raised its one-week deposit rate by 50 basis points to 7.75% at a weekly tender, bringing the base rate and the one-week deposit rate to the same level. “The huge rate hike managed to get some pressure off the forint, that is why it was able to firm in the negative global mood in the past few days,” an FX trader in Budapest said. “But the fundamentals have not changed, investors are worried about soaring inflation, the budget deficit and the lack of agreement over EU funds, so the forint’s rate will stay above 390 unless global markets turn very optimistic.” Hungarian long-term government bond yields kept ticking lower, a fixed-income trader said, as the Hungarian Debt Management Agency (AKK) was offering to sell three series of bonds worth a total of 30 billion forints later in the day. “Tuesday’s big surprise rate hike stabilized the forint’s rate … and this seems to be supporting the middle and the long end of the curve,” the trader said. The yield on the 10-year benchmark bond was about 8.15% on Thursday, more than 20 basis points lower than on Tuesday before the rate hike. Elsewhere, the Czech crown and the Romanian leu v currencies were little moved while the Polish zloty eased 0.21% to 4.6810 per euro. Stock markets in the region weakened, tracking a slide in global stocks, with Prague leading losses as it shed 1.48%. Budapest lost 0.89% while Warsaw was 1.31% weaker. CEE SNAPSHO AT MARKETS T 1100 CET CURRENC IES Latest Previous Daily Change bid close change in 2022 Czech % % Hungary 0 Polish Romania % Croatia % Serbian 0 % % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2022 Prague 1263.87 1282.820 -1.48% 0 Budapes 39543.3 39900.32 -0.89% -22.04 t 5% Warsaw <.WIG20 1710.53 1733.19 -1.31% -24.54 Buchare > 12472.3 12516.82 -0.36% -4.51% st 7 Ljublja <.SBITO 1128.14 1134.22 -0.54% - 10.14 na P>% Zagreb <.CRBEX 2014.08 2035.98 -1.08% -3.14% Belgrad <.BELEX 838.93 839.27 -0.04% +2.21 e 15 >% Sofia <.SOFIX 613.21 612.50 +0.12 -3.53% >% Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republi c ps ps ps Poland ps ps ps ps FORWARD 3×6 6×9 9×12 3M interb ank Hungary Poland Note: are for ask FRA prices quotes ************* ************************ ******************* ( Additional reporting by Alan Charlish in Warsaw; Editing by Krishna Chandra Eluri)

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