June 27, 2022

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Crown gains after rate hike, forint stronger before election

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PRAGUE — The Czech crown rose on Friday

to its highest level since Feb. 21 as markets took in the

central bank’s latest rate hike, while Hungary’s forint pushed

higher before a closely watched election.

Central European markets generally drifted with worry over

the Russia-Ukraine conflict still high. But stock markets in the

region bucked global weakness and climbed, with Prague

near 1-month highs.

The forint edged up to 367.80 to the euro before

an election on Sunday when Prime Minister Viktor Orban faces a

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united oppisition for the first time since he came to power in

2010.

According to the latest polls, Orban’s ruling Fidesz party

has a narrow lead over the opposition alliance.

The crown was the main currency mover on Friday,

rising 0.2% on the day to 24.40 to the euro by 1004 GMT. It

touched a session high of 24.31 earlier.

The currency has had limited reaction to a Thursday interest

rate hike that brought the base Czech rate to 5.00%, its highest

since 2001 as the central bank kept up its fight against

inflation.

With prices set to rise further amid fallout from Russia’s

invasion of Ukraine, the Czech National Bank (CNB) said it was

ready to continue raising rates.

Markets see scope for further rises, although growth worries

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– after the central bank said on Thursday this year’s growth

outlook of 3% could be cut in half – could limit that room.

“We think the CNB may be too optimistic about GDP growth

now,” Erste Group Bank said.

“Thus, if lower growth materializes, it could become less

hawkish. Altogether, due to the current hawkish communication of

the Czech…

Reuters

2022-04-01 06:20:59

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