CEE MARKETS-Forint sinks to two-month-low on rising U.S. Treasury yields

BY Reuters | TREASURY | 09/28/21 05:23 AM EDT
       BUDAPEST, Sept 28 (Reuters) - Hungary's forint hit
a two-month-low against the euro on Tuesday, pressured by rising
U.S. Treasury yields, high inflation and a row with the European
Union, which has led to a freeze in pandemic recovery funding.
    At 0833 GMT, the forint traded at 359.03 per euro, its
weakest level since the end of July and within sight of the key
360 level. The currency, which fell nearly 2% over the past
week, has surrendered most of its gains made this year.
    The Hungarian and Czech central banks both started raising
rates in June, boosting the forint and the crown by
some 3% against the euro ahead of last week's the National Bank
of Hungary (NBH) rate meeting, when the bank raised rates by a
smaller-than-expected 15 basis points to 1.65%.
    "We are headed north, we will see whether we will reach the
360 mark today," a Budapest-based currency dealer said.
    "U.S. yields are rising, the 10-year is nearly at 1.55%, and
the region as a whole is weakening."
    The trader said several factors, including the Hungarian
inflation outlook and the funding row with the EU, pointed
towards more forint weakening in the near term.
    Despite raising its inflation forecasts for this year and
the next, the NBH said it would hike rates further in
15-basis-point steps, slowing the pace of tightening after three
successive 30-basis-point hikes.
    Most central European currencies were in the red in morning
trade but for the Serbian dinar, which gained 0.1%.
    Hungarian brokerage Erste Investment said the forint broke
through its 200-day moving average on Monday, failing to benefit
from a credit rating upgrade by Moody's last week.
    Erste said the Hungarian central bank's swap tenders
providing euro liquidity this week could stem bigger falls in
the exchange rate.
                   CEE      SNAPSHO   AT
                   MARKETS  T        1033
                                     CET
                            CURRENC
                            IES
                            Latest   Previou  Daily    Change
                                     s
                            bid      close    change   in 2021
 EURCZK  Czech     EURHUF  Hungary   0        0
 EURPLN  Polish    EURRON  Romanian  EURHRK  Croatian  EURRSD  Serbian   0        0
         Note:     calculated from            1800
         daily                                CET
         change

                            Latest   Previou  Daily    Change
                                     s
                                     close    change   in 2021
 .PX     Prague             1322.40  1322.40   +0.00%   +28.75
                                          00                 %
 .BUX    Budapest           51564.2  51365.9   +0.39%   +22.46
                                  8        9                 %
 .WIG20  Warsaw    %
 .BETI   Buchares           12598.0  12510.2   +0.70%   +28.48
         t                        2        6                 %
 .SBITO  Ljubljan  %
 .CRBEX  Zagreb    %
 .BELEX  Belgrade  .SOFIX  Sofia     %

                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic
 CZ2YT=    2-year  s
 CZ5YT=    5-year  s
 CZ10YT            s
         Poland
 PL2YT=    2-year  s
 PL5YT=    5-year  s
 PL10YT            s
                   FORWARD
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     Hungary   Poland    Note:     are for ask
         FRA       prices
         quotes
         ********************************************
         ******************





 (Reporting by Gergely Szakacs; Editing by Rashmi Aich)



In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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