CEE MARKETS-Forint firms as markets eye possibility of further rate hikes

BY Reuters | ECONOMIC | 11/30/21 05:07 AM EST
       By Anita Komuves
    BUDAPEST, Nov 30 (Reuters) - The Hungarian forint firmed on
Tuesday, outperforming its peers as expectations of further rate
hikes from the central bank overshadowed global market worries
over the Omicron variant of the coronavirus.
    The forint was up 0.41% and was trading at 366.49
per euro.
    Market players' expectations that the central bank might
decide to widen its interest rate corridor later today at its
scheduled non-rate-setting meeting was supporting the forint,
two FX traders in Budapest said.
    "If they widen the corridor, that is a strong signal that
they are willing to hike the one-week deposit rate further if
needed, which could be positive for the forint," one trader
    The central bank's press department declined comment.
    Hungary's central bank raised its one-week deposit rate by
40 basis points to 2.9% last Thursday at its weekly tender,
delivering the second increase in the deposit rate in a week.
 At the moment, the bank's overnight and one-week
collateralized loan rate is 3.05%, which is the top of the
interest rate corridor.
    The Polish zloty firmed 0.16% to 4.6775 versus the
common currency after flash CPI data for November came in at
7.7%, higher than expected.
    Inflation data could shape market expectations before the
December meeting of the monetary policy council and could
temporarily distract from global factors, mostly the new
COVID-19 variant, Bank Millennium wrote in a client note.
    Emerging markets were pressured by a warning by U.S.
drugmaker Moderna's chief who said that COVID-19 vaccines were
unlikely to be as effective against the Omicron variant as they
have been against the Delta version.
    The Czech crown was up 0.14% and was trading at
25.565 to the euro as third-quarter data showed that the economy
fared better than expected amid supply snags and falling
exports, with domestic demand boosting GDP by 1.5%
    Most stock markets in the region fell, with Prague
leading losses by plunging 1.08%. Warsaw was 0.79%
    Budapest was down by 0.78%. But shares in 4iG
 were 3.86% higher by 0941 GMT after the IT company
said that it was going to buy 100% of Digi Tavkozlesi Kft and
its subsidiaries, the second in Hungary's fixed voice, internet
and TV market.

                  CEE      SNAPSHO   AT
                  MARKETS  T        1039
                           Latest   Previou  Daily   Change
                           bid      close    hm      in
 EURCZK  Czech    %       %
 EURHUF  Hungary  0        0       %
 EURPLN  Polish   %
 EURRON  Romania  EURHRK  Croatia  %
 EURRSD  Serbian  0        0       %       %
         Note:    calculated from            1800
         daily                               CET

                           Latest   Previou  Daily   Change
                                    close    change  in
 .PX     Prague            1348.24  1362.99  -1.08%   +31.2
                                         00              6%
 .BUX    Budapes           51175.6  51579.6  -0.78%   +21.5
         t                       6        6              4%
 .WIG20  Warsaw   %
 .BETI   Buchare           12195.6  12195.6   +0.00   +24.3
         st                      1        1       %      7%
 .SBITO  Ljublja  4%
 .CRBEX  Zagreb   2%
 .BELEX  Belgrad  %
 .SOFIX  Sofia    5%

                           Yield    Yield    Spread  Daily
                           (bid)    change   vs      change
                                             Bund    in
         Czech                                       spread
 CZ2YT=           ps
 CZ5YT=           ps
 CZ10YT           ps
 PL2YT=           ps
 PL5YT=           ps
 PL10YT           ps
                           3x6      6x9      9x12    3M
         Czech    Hungary  Poland   Note:    are for ask
         FRA      prices

 (Additional reporting by Pawel Florkiewicz in Warsaw; Editing
by Shailesh Kuber)

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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.

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