CEE MARKETS-Currencies weaken as markets await Polish central bank decision

Reuters
Sep 02
CEE MARKETS-Currencies weaken as markets await Polish central bank decision

WARSAW, Sept 2 (Reuters) - Central European currencies weakened on Tuesday, shedding some of the gains made a day earlier as markets await the Polish central bank's decision on interest rates and CPI data from the Czech Republic later this week.

"Today should be rather quiet in the region ahead of a busier second half of the week with the National Bank of Poland meeting and inflation prints in Turkey and the Czech Republic," ING analysts wrote in a note to clients.

"CEE FX is supported by a weaker USD and a rebound in global equity markets, which may change quickly due to the local story in the coming days. EUR/PLN, on the other hand, should head back down below 4.250 if the NBP makes a hawkish cut."

The U.S. dollar clawed back some ground in Asian trading on Tuesday following five days of selling, ahead of the return of U.S. traders from the Labour Day holiday.

The zloty EURPLN= lost 0.2% to 4.2645 per euro at 0759 GMT.

The National Bank of Poland is expected to resume lowering interest rates on Wednesday, a majority of respondents in a Reuters poll said, as inflation falls within the bank's target range.

The NBP will cut its key rate by 25 basis points to 4.75%, according to 26 of 30 analysts polled, while four expect it to remain steady at 5%.

Polish inflation eased more than forecast in August, preliminary data showed last month, strengthening expectations for a cut, although these were somewhat offset by projections for a higher than expected budget deficit in 2026.

"This downside surprise solidifies expectations for a rate cut... Given the uncertainty around the NBP's short-term reaction function, the scope for surprises in either direction remains substantial," Goldman Sachs said.

"However, reflecting Poland's weak underlying inflation dynamics and the high level of policy rates, we think the risks are skewed towards a 50 basis points cut rather than unchanged rates."

The Czech crown EURCZK= had inched down 0.1%, trading at 24.4640 per euro

"The EUR/CZK move down seems too fast to us given the move in rates, and although we remain bullish on the CZK due to the end of the Czech National Bank cutting cycle, some correction here would not surprise us," ING said.

Elsewhere, Hungary's forint EURHUF= fell 0.4% to 396.60 to the euro and Romania's leu EURRON= was down 0.2% at 5.0806.

"The forint firmed past 395 to the euro yesterday... it firmed briefly past this support level during yesterday's strengthening but this morning we can see a correction, with an important resistance level at around 396.40 and then at 397.60," brokerage Equilor said.

Stock markets also mostly fell, led by a 1.5% loss in Warsaw .WIG20. The main index of the Budapest bourse .BUX was stable.

CEE MARKETS SNAPSHOT AT 0959 CET

CURRENCIES

Latest trade

Previous close

Daily change

Change in 2025

Czech crown

EURCZK=

24.4640

24.4400

-0.10%

+3.05%

Hungary forint

EURHUF=

396.6000

394.9500

-0.42%

+3.74%

Polish zloty

EURPLN=

4.2645

4.2570

-0.18%

+0.29%

Romanian leu

EURRON=

5.0806

5.0717

-0.18%

-2.05%

Serbian dinar

EURRSD=

117.0800

117.1800

+0.09%

-0.11%

Note: daily change calculated from 1800 CET

STOCKS

Latest

Previous close

Daily change

Change in 2025

Prague

.PX

2266.20

2271.6100

-0.24%

+28.75%

Budapest

.BUX

103690.41

103713.16

-0.02%

+30.71%

Warsaw

.WIG20

2728.95

2770.36

-1.49%

+24.50%

Bucharest

.BETI

20223.37

20336.09

-0.55%

+20.95%

BONDS

Yield (bid)

Yield change

Spread vs Bund

Daily change in spread

Czech Rep 2-year

CZ2YT=RR

3.4200

0.0210

+144bps

+0bps

Czech Rep 5-year

CZ5YT=RR

3.8700

0.0120

+155bps

-3bps

Czech Rep 10-year

CZ10YT=RR

4.3370

0.0510

+155bps

+1bps

Poland 2-year

PL2YT=RR

4.3840

0.0600

+240bps

+4bps

Poland 5-year

PL5YT=RR

4.9660

0.0210

+265bps

-2bps

Poland 10-year

PL10YT=RR

5.5570

0.0190

+277bps

-2bps

FORWARD RATE AGREEMENTS

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRA, PRIBOR=

3.53

3.53

3.53

3.50

Poland

PLNFRA, WIBOR=

4.51

4.16

3.86

4.82

Note: FRA quotes are for ask prices

(Reporting by Jason Hovet in Prague, Anna Wlodarczak-Semczuk in Warsaw and Krisztina Than in Budapest; Editing by Ros Russell)

((anna.wlodarczak@thomsonreuters.com;))

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