CEE MARKETS-FX, stocks lifted by global risk-on mood

By Anita Komuves BUDAPEST, June 21 (Reuters) – Central European currencies and stocks gained on Tuesday as the dollar eased and risk appetite returned to markets after last week’s turmoil, when investors were concerned about aggressive interest rate hikes and risks of a global recession. “CEE currencies strengthened today …. The firming moves coincided with a slightly weaker U.S. dollar and easing of the previous risk-off mood on global markets,” Erste Group wrote in a client note. Hungary’s forint added 0.27% and was trading at 396.00 per euro, moving further away from a historic low of 403 that it reached last week. “We see a bit of a correction and a return of risk appetite after last week’s turmoil, but we will have to see whether this mood continues after markets in the U.S. open later today,” an FX trader in Budapest said. U.S. markets were closed on Monday for a holiday. Hungary’s central bank will hold an FX swap tender providing euro liquidity later in the day. The bank announced in May that in June it would hold a total of four FX swap tenders providing euro liquidity and two short-term discount bill auctions, in order to strengthen the effectiveness of monetary transmission. The Czech crown was flat ahead of a meeting of the Czech National Bank on Wednesday. Analysts polled by Reuters expect the meeting to result in a 100-basis-point or 125-basis-point rise in the key two-week repo rate, now at 5.75%. This will be the last meeting of the bank before incoming governor Ales Michl takes over. Michl has consistently voted against rate hikes during the central bank’s year-long tightening cycle, which has raised the main rate by a total of 550 basis points. However, his promise of no more rate hikes will be tested right away by soaring inflation and a hawkish turn among major central banks. Elsewhere, the Polish zloty added 0.22% and was trading at 4.6390 per euro. “The zloty continues to strengthen, taking advantage of local factors, i.e. growing expectations for interest rate hikes in Poland … and another set of probably good data from the domestic economy,” Bank Millennium wrote. Stocks in the region were also higher, tracking European peers, with Warsaw’s index leading gains by adding 1.69%. CEE SNAPSH AT MARKETS OT 1017 CET CURREN CIES Latest Previou Daily Change s bid close change in 2022 Czech 0 Hungary 00 0 Polish Romania Croatia Serbian 00 0 Note: calculated from 1800 CET daily change Latest Previou Daily Change s close change in 2022 Prague 1323.6 1308.90 +1.12% 2 00 Budapes 40197. 39691.1 +1.28% -20.75% t 72 2 Warsaw <.WIG20 1708.2 1679.89 +1.69% -24.65% > 0 Buchare 12406. 12325.8 +0.65% -5.02% st 12 0 Ljublja <.SBITO 1143.6 1150.71 -0.61% -8.90% na P> 8 Zagreb <.CRBEX 1992.6 1993.82 -0.06% -4.17% > 8 Belgrad <.BELEX 834.40 836.00 -0.19% +1.66% e 15> Sofia <.SOFIX 612.41 612.77 -0.06% -3.66% > Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c Poland FORWARD 3×6 6×9 9×12 3M interban k Czech Hungary Poland Note: are for ask FRA prices quotes ******************************************* ******************* (Reporting by Anita Komuves; Additional reporting by Alan Charlish in Warsaw; Editing by Bradley Perrett)