Zloty pulls back as ECB rate cuts could pressure hawkish NBP
EASTEUROPE-MARKETS/ (CEE MARKETS):CEE MARKETS-Zloty pulls back as ECB rate cuts could pressure hawkish NBP
WARSAW, Dec 12 (Reuters) - The zloty drifted further from a 2-1/2 month high on Thursday with analysts saying recent hawkishness from the Polish central bank could be undermined by further rate cuts from the European Central Bank (ECB). The ECB is all but certain to cut interest rates by 25 basis points later in the day and signal further easing next year as inflation across the euro zone falls back close to target and the economy falters. By 0951 GMT the zloty was down 0.3% at 4.2810, having hit its strongest level since late September on Monday, at 4.2550, following comments from Polish central bank governor Adam Glapinski last week who pushed back the prospect of interest rate cuts beyond 2025, citing inflation risks. "This morning, EURPLN is close to 4.27 and, in our view, is likely to move further towards 4.30, among others in reaction to the dovish ECB tone expected during the day," Santander Bank Polska analysts wrote in a note. "If the ECB decides to cut rates by 50 bps today and/or presents a very mild statement, then investors may again question whether the hawkish message from the NBP Governor...about the postponement of the discussion on rate cuts until October next year will stand the test of time." Some Polish policymakers still say rate cuts could start sooner, possibly after March, when there is more clarity on the inflation outlook. Investors have priced in some 125 basis points of easing over the next 12 months. Glapinski's deputy told Reuters the imposition of tariffs by the United States could support earlier easing, should they prove disinflationary. S&P flagged that Central European sovereign ratings could be tested by new U.S. policies. Hungary's forint edged 0.1% lower to 410.0500 per euro, but hung on to most of the gains made since slumping to a two-year low of 415.35 last week. "The forint was massively underperforming against most currencies for months, and it seems like investors don't want to keep such big positions at the end of the year," a Budapest-based trader said. A surprise ratings outlook upgrade by Fitch last week, citing a reduction in macroeconomic imbalances, boosted the confidence of some investors, according to the trader. "The forint also crossed some important technical barriers, one very significant support level was around 412-412.50, lots of trades happened after the currency firmed past that," the trader added. The Czech crown held steady at 25.0650, a touch below its highest levels since late September. CEE SNAPSHOT AT MARKETS 1051 CET CURRENCI ES Latest Previous Daily Change trade close change in 2024 Czech 25.0650 25.0750 0.04% -1.45% crown Hungary 410.0500 409.7900 -0.06% -6.55% forint Polish 4.2810 4.2687 -0.29% 1.48% zloty Romanian 4.9699 4.9672 -0.05% 0.09% leu Serbian 116.9300 116.9800 0.04% 0.27% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2024 Prague 1735.62 1722.320 0.77% 22.74% 0 Budapest 80469.64 80530.65 -0.08% 32.74% Warsaw 2278.04 2296.10 -0.79% -2.77% Bucharest 17358.43 17394.91 -0.21% 12.93% Spread Daily vs Bund change in Czech spread Republic 2-year
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First Published:12 Dec 2024, 04:23 PM IST
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