News

PRAGUE, March 18 (Reuters) - Central Europe's currencies mostly weakened on Monday, moving in the same direction after largely diverging so far in 2024, amid caution before a U.S. Federal Reserve meeting this week along with expectations of a further Czech interest rate cut.

The Czech crown and Hungarian forint have fallen this year as their central banks cut rates in a continuing easing cycle - though they have regained ground in the past week.

The Polish zloty, on the other hand, is stronger than the start of the year as rates stay on hold but has faded recently.

Easing policy in the region is cutting rate differentials as the Federal Reserve and European Central Bank have yet to lower their rates, and markets globally will be watching this week for the U.S. central bank's projections for cuts ahead.

On Wednesday, the Czech National Bank (CNB) is expected to deliver another 50 basis point rate cut, as a weaker-than-expected crown and lingering price pressures dampen thoughts of a quickening easing pace.

The crown EURCZK= gained around 0.8% last week amid hawkish central banker comments. It had touched two-year lows beyond 25.50 per euro last month. On Monday, it traded 0.3% down on the day at 25.202 by 0937 GMT.

"We think the (crown) strengthened too quickly, which may have been triggered by hawkish comments from the CNB," ING said in a note. "We believe an acceleration in the pace of rate cuts will remain on the table for the next meeting, which should keep the (crown) under pressure."

ING added the forint could renew gains after Hungary's government said it would conduct talks with the central bank about legal changes that the bank had said would reduce its independence.

"The government backtracked a bit on its central bank law change, which calmed the markets but there are too many uncertainties around the forint to firm significantly, unless the Fed's decision or its following communication is beneficial for emerging markets," a Budapest-based trader said.

Poland's zloty EURPLN= was also down 0.3% at 4.3065 to the euro while Romania's leu EURRON= was steady at 4.972 per euro.

CEE MARKETS

SNAPSHOT

AT 1037 CET

CURRENCIES

in 2024

EURCZK=

EURCZK=

25.2020

25.1330

EURHUF=

Hungary forint

EURHUF=

EURPLN=

Polish zloty

EURPLN=

EURRON=

Romanian leu

EURRON=

EURRSD=

Serbian dinar

EURRSD=

Note: daily change

calculated from

1800 CET

in 2024

.PX

.PX

1488.51

1480.6800

.BUX

.BUX

65117.84

64988.33

.WIG20

2342.58

2350.97

.BETI

.BETI

16358.91

16246.54

vs Bund

change in

CZ2YT=RR

2-year

3.6570

-0.0750

+074bps

-8bps

CZ5YT=RR

5-year

3.6200

0.0180

+114bps

+0bps

CZ10YT=RR

10-year

CZ10YT=RR

3.8330

0.0500

+138bps

+3bps

PL2YT=RR

2-year

PL2YT=RR

5.1490

-0.0150

+223bps

-2bps

PL5YT=RR

5-year

PL5YT=RR

5.3380

0.0480

+286bps

+3bps

PL10YT=RR

10-year

PL10YT=RR

5.4820

0.0340

+302bps

+1bps

FORWARD

3x6

6x9

9x12

3M interbank

CZKFRAPRIBOR=

HUFFRABUBOR=

PLNFRAWIBOR=

Note: FRA quotes

are for ask prices

**************************************************************

(Reporting by Jason Hovet in Prague, Boldizsar Gyori in Budapest and Alan Charlish in Warsaw; Editing by Andrew Cawthorne)

((jason.hovet@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.