CEE MARKETS-Forint jumps after larger-than-expected cenbank rate hike

BY Reuters | ECONOMIC | 09/27/22 09:00 AM EDT
    By Anita Komuves
       BUDAPEST, Sept 27 (Reuters) - The Hungarian forint
jumped while long-term government bond yields were stable on
Tuesday after the National Bank of Hungary delivered a 125 basis
point rate hike, above expectations, raising the benchmark
interest rate to 13%.
    The forint firmed 0.85% on the day to 405.10 per
euro, up from 407.85 where it was trading right before the rate
hike.
    Most analysts in a Reuters poll expected a 100 bps hike,
with one analyst who pencilled in a 125 bps increase to 13%.

    "Investors are waiting for the press conference now to see
what the reason for this big hike was. There is a possibility
that this was one big step that signals the end of the
tightening cycle," an FX trader in Budapest said.
    Hungarian central bank Governor Gyorgy Matolcsy will hold a
news conference at 1300 GMT.
    Deputy Governor Barnabas Virag told reporters last Thursday
that the NBH could consider ending its rate rise cycle after
Tuesday's meeting.
    Long-term government bond yields were not immediately moved
after the decision, a fixed-income trader said.
    The yield on the benchmark 10-year bond was about 9.56%,
unmoved from levels in the previous session and near a 10-year
high which it had reached earlier this month.
    Policymakers across central Europe are seeking to end a
cycle of rate hikes running since last year even as inflationary
pressures remain and the world's major central banks keep
pursuing higher rates.
    The Czech National Bank, meeting on Thursday, already left
rates unchanged in August for the first time in over a year.
    The Polish zloty weakened 0.22% to 4.7595 versus
the common currency. It was pressured by global recession fears
and growing risk aversion towards emerging currencies, Bank
Millennium wrote in a note.
                  CEE      SNAPSH   AT
                  MARKETS  OT      1447
                                   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      50       %       %
         Note:    calculated from          1800
         daily                             CET
         change

                           Latest  Previo  Daily   Change
                                   us
                                   close   change  in
                                                   2022
 .PX     Prague            1150.2  1151.0  -0.08%
                                0     800
 .BUX    Budapes           38913.  38528.   +1.00  -23.28
         t                     72      86       %       %
 .WIG20  Warsaw   5       8       %       %
 .BETI   Buchare           10805.  10622.   +1.72  -17.27
         st                    23      15       %       %
 .SBITO  Ljublja  8               %
 .CRBEX  Zagreb   4       3
 .BELEX  Belgrad  %       %
 .SOFIX  Sofia    Yield   Yield   Spread  Daily
                           (bid)   change  vs      change
                                           Bund    in
         Czech                                     spread
         Republi
         c
 CZ2YT=           0      ps
 CZ5YT=           0      ps
 CZ10YT           0      ps
         Poland
 PL2YT=           0      ps
 PL5YT=           0      ps
 PL10YT           0      ps
                  FORWARD
                           3x6     6x9     9x12    3M
                                                   interb
                                                   ank
         Czech    Hungary  Poland   Note:    are for ask
         FRA      prices
         quotes
         ****************************************
         **********************
 (Additional reporting by Pawel Florkiewicz in Warsaw; editing
by Uttaresh.V and Angus MacSwan)



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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