CEE MARKETS-Zloty leads gains ahead of expected strong Q1 GDP data

BY Reuters | ECONOMIC | 05/16/22 05:18 AM EDT
       BUDAPEST, May 16 (Reuters) - The Polish zloty
firmed on Monday ahead of Tuesday's gross domestic product (GDP)
figures, which are expected to show robust growth in the first
quarter amid growing headwinds for Central European economies.
    At 0845 GMT, the zloty was 0.5% stronger at 4.6725 against
the euro, outperforming the Hungarian forint and the
Czech crown, which gained 0.3% and 0.2%, respectively.
    Poland, the region's biggest economy, is expected to report
8% first-quarter economic growth on Tuesday, accelerating from
7.3%, while analysts project Hungary's growth easing to 6.9%
from 7.1% in the previous three months.
    The Hungarian central bank's deputy governor last week,
however, said that first-quarter growth could in fact exceed 8%
in Hungary as well, signalling a strong momentum before an
expected slowdown later this year.
    "Reports from the domestic economy pointing to the continued
good economic conditions will be a potential factor supporting
the zloty, but it is the moods in the global markets that will
be their main determinant," Bank Millennium said in a note.
    "These, in turn, are determined, on the one hand, by
expectations for further monetary policy tightening in the U.S.,
and, on the other hand, by growing concerns about a slowdown in
the economy."
    U.S. rate hikes and a stronger dollar are hitting investor
appetite in the region. Last week, U.S. Federal Reserve Chair
Jerome Powell repeated his expectation of half-percentage-point
rate rises at the next two policy meetings.
    After sharp interest rate hikes around central Europe since
last year, fears of an end to tightening, like in the Czech
Republic, or a slowing pace, such as in Hungary, have started
pressuring currencies, prompting the Czech central bank to
intervene last week.
     The Czech and Hungarian central banks, which last June
became the first in the European Union to launch big rate hikes
to fight inflation, surprised investors last week by looking
ready to step on the brakes, wary of stifling economic growth.

    Analysts said the comments came as a surprise as inflation
is still surging in both countries.
    "In connection with the war in Ukraine, there is a threat of
outages in imports of some agricultural commodities and there
have been also disruptions in deliveries of some key components
in industry, namely for the carmakers, which can strengthen
price pressures further," Generali Investments CEE Chief
Economist Radomir Jac said.
    Even with Monday's gains, the zloty and the forint remain in
the red for the year despite massive monetary tightening by
their central banks, with the forint posting a 4% loss so far,
the worst in Central Europe.

                   CEE      SNAPSHO   AT
                   MARKETS  T        1045
                            Latest   Previou  Daily    Change
                            bid      close    change   in 2022
 EURCZK  Czech     EURHUF  Hungary   0        0
 EURPLN  Polish    EURRON  Romanian  EURHRK  Croatian  EURRSD  Serbian   0        0
         Note:     calculated from            1800
         daily                                CET

                            Latest   Previou  Daily    Change
                                     close    change   in 2022
 .PX     Prague             1299.25  1296.91   +0.18%  #VALUE!
 .BUX    Budapest           41502.6  41255.7   +0.60%  -18.17%
                                  5        0
 .WIG20  Warsaw    .BETI   Buchares           12217.6  12133.1   +0.70%   -6.46%
         t                        8        6
 .SBITO  Ljubljan  .CRBEX  Zagreb    .BELEX  Belgrade  .SOFIX  Sofia     Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
         Czech                                         spread
 CZ2YT=    2-year  s
 CZ5YT=    5-year  s
 CZ10YT            s
 PL2YT=    2-year  s
 PL5YT=    5-year  s
 PL10YT            s
                            3x6      6x9      9x12     3M
         Czech     Hungary   Poland    Note:     are for ask
         FRA       prices

 (Reporting by Gergely Szakacs; Editing by Rashmi Aich)

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