WARSAW, May 27 (Reuters) - The Hungarian forint
firmed on Wednesday after the country's central bank
left rates on hold and as investors looked ahead to a potential
deal on releasing European Union funds.
The forint has been Central Europe's best-performing
currency this year due to investor optimism that the new
centre-right government of Prime Minister Peter Magyar can get
the cash released. It was frozen due to a dispute over
democratic standards under the previous administration.
On Saturday, Magyar said negotiations related to the funds
were "progressing well" and he was planning to sign a deal in
Brussels on Thursday to release them.
On Tuesday, Hungary's central bank left its base rate
unchanged at 6.25%, as expected, following a rise in global
energy prices and domestic fiscal risks, but noted a significant
improvement in the inflation outlook amid strong gains in the
forint.
The forint was 0.34% firmer against the euro at 355.30 at
0839 GMT.
"In our view, a persistent easing of risks, stabilisation of
the forint and yields at a favourable level could lead to a 25bp
interest rate cut in June, followed by one or two further cuts,"
ING said in a note.
"Although the market has room to price in more cuts at the
front of the curve, we do not think the June rate cut alone will
pose much of a threat to the forint and we remain bullish on FX
despite the dovish turn ... the EU funds story also continues
and we should see more details this Thursday."
Other currencies were mixed, with the Polish zloty
down 0.11% at 4.24 and the Czech crown down 0.05% at
24.277, while the Romanian leu was 0.11% firmer at
5.2355.
Benchmark 10-year Polish bond yields were 3 basis points
lower at 5.749% ahead of an auction at which the finance
ministry was expected to sell bonds worth 7 billion to 11
billion zlotys ($1.92 billion to 3.02 billion).
"After yields stalled near significant resistance levels
last week, we expect little change, with limited room for a
continuation of yesterday's downward trend during today's
session," Bank Millennium said in a note.
CEE MARKETS SNAPSHOT AT 1039 CET
CURRENCIES Latest Previou Daily Change
trade s close change in 2026
Czech 0
Hungary 00 0 %
Polish Romania %
Serbian 00 0 %
Note: daily change calculated from 1800 CET
STOCKS Latest Previou Daily Change
s close change in 2026
Prague 2573.8 2583.73 -0.38% -4.16%
8 00
Budapes 131407 130916. +0.38 +18.35
t .96 32 % %
Warsaw 9 % %
Buchare 30705. 30702.7 +0.01 +25.64
st 02 7 % %
BONDS Yield Yield Spread Daily
(bid) change vs change
Bund in
spread
Czech ps
2-year
Czech ps
5-year
Czech ps
10-year
Poland ps
Poland ps
Poland ps
FORWARD RATE 3x6 6x9 9x12 3M
AGREEMENTS interba
nk
Czech Poland Note: FRA quotes are for ask prices
($1 = 3.6395 zlotys)
(Reporting by Alan Charlish in Warsaw, Krisztina Than and Anita
Komuves in Budapest; Editing by Thomas Derpinghaus)
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