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CEE MARKETS-Dollar's strength pushes currencies to weakest levels this year

·3 min read

WARSAW/BUDAPEST, March 5 (Reuters) - Central and eastern European currencies fell to their weakest levels so far this year on Friday, as the dollar strengthened and bond yields rose further after U.S. Federal Reserve Chair Jerome Powell pledged to stick to an easy monetary policy. Powell on Thursday repeated his pledge to keep credit loose and flowing until Americans are back to work, rebutting investors who have openly doubted he can stick to that promise once the pandemic passes and the economy surges on its own. "Jerome Powell's words yesterday did not calm down the markets which led to a strengthening of the dollar and that is putting pressure on emerging markets," a Budapest-based FX trader said. At 0928 GMT the Hungarian forint was at its weakest point since November, slipping 0.40% against the euro at 366.20. The Czech crown and the Polish zloty were both at their weakest so far this year. The crown was 0.30% softer at 26.31 versus the euro and the zloty was 0.32% weaker at 4.5715. Concerns that adding large-scale government spending to a fast-recovering U.S. economy would push inflation above the Federal Reserve's target sooner than anticipated have driven a global spike in bond yields and sent stock markets lower. A recent spike in coronavirus cases and the renewed tightening of lockdown measures in response was also putting pressure on CEE markets. Benchmark 10-year Polish bond yields were 6 basis points higher at 1.65% and Czech 10 year yields were 2.7 basis points lower at 1.755%, after having risen to 1.802% earlier in the session. The region's main stock indices were 0.15-0.86% lower. In Poland, investors were also looking ahead to a press conference with central bank governor Adam Glapinski scheduled for 1300 GMT. "We've got today's NBP governor press conference which should sound dovish... and Adam Glapinski should again say that FX interventions are still possible, which is of course negative for the zloty" said Mateusz Sutowicz, a financial market analyst at Bank Millennium in Warsaw. "The third local risk for the zloty is the FX credit conversion." Investors in Poland are eyeing the possibility that a plan for banks to offer out-of-court settlements to clients with mortgages in Swiss francs will weaken the zloty as banks are forced to close FX positions. CEE SNAPSHO AT MARKETS T 1028 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech EURHUF= Hungary 0 EURPLN= Polish EURRON= Romanian EURHRK= Croatian % EURRSD= Serbian 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1056.92 1058.470 -0.15% +2.90% 0 .BUX Budapest 42562.9 42932.61 -0.86% +1.08% 2 .WIG20 Warsaw 1937.67 1944.86 -0.37% -2.33% .BETI Buchares 10401.6 10340.80 +0.59 +6.08% t 5 % .SBITOP Ljubljan <.SBITOP 983.97 983.56 +0.04 +9.23% a > % .CRBEX Zagreb 1831.81 1845.41 -0.74% +5.32% .BELEX1 Belgrade <.BELEX1 743.56 744.49 -0.12% -0.67% 5 5> .SOFIX Sofia 494.10 495.18 -0.22% +10.41 % Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT=R 2-year ps CZ5YT=R 5-year ps CZ10YT= ps Poland PL2YT=R 2-year ps PL5YT=R 5-year ps PL10YT= ps FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.43 0.62 0.86 0.36 Rep Hungary 0.94 1.14 1.29 0.77 Poland 0.27 0.32 0.46 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Alan Charlish in Warsaw and Anita Komuves in Budapest; Editing by Shailesh Kuber)