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CEE MARKETS-Forint leads FX lower, but hawkish signals buoy crown

ReutersMar 20, 2025 10:56 AM

- Hungary's forint led central European currencies lower on Thursday, with a firmer dollar weighing on the region after the U.S. Federal Reserve indicated no rush to lower rates, while a hawkish Czech central bank signals steadied the crown.

Central European currencies have been knocked back this week, hit in the previous session by events in Turkey where authorities detained the president's main political rival.

On Thursday, markets digested a Fed meeting that left rates unchanged although projections showed inflation staying on a slightly more sticky path.

Central bankers in Europe and elsewhere are watching Fed signals and face new risks to policymaking amid the start of trade wars sparked by U.S. tariffs. Central European policymakers have mostly been on hold on policy since last year.

In Hungary, where rates were last cut in September, the forint touched a 5-1/2 month high on Monday before retreating, but it is holding on the strong side of the psychological level of 400 per euro.

The forint EURHUF= traded down 0.4% at 399.75 by mid-morning on Thursday.

"Key levels remained unchanged," brokerage Equilor said, adding the forint was staying locked in a range of 398-400.

Poland's zloty EURPLN= also eased a touch to 4.195 to the euro, but was little moved by data on Thursday morning showing Polish wages rising below expectations and a deeper-than-expected decline in industry last month.

Analysts see the zloty, which hit a 10-year high of 4.127 per euro last month, being influenced at the moment more by global factors like tariffs and talks on ending the Ukraine-Russia war.

European Union leaders were meeting in Brussels on Thursday where those topics were on the agenda.

The Czech currency held up somewhat on Thursday, on the weak side of the big 25 per euro level it hit on Wednesday after a second central banker signalled interest rates were likely to stay on hold next week.

Czech central bank policymaker Jan Kubicek told Reuters in an interview he was leaning towards a pause in rate cuts at next week's meeting following a reduction just last month.

Another rate setter, Jakub Seidler, told Bloomberg earlier this week that he would prefer to hold rates steady at the meeting.

"Rate stability at the meeting next week seems a sure thing," CSOB said in a trading note.

The crown EURCZK= traded at 25.025 per euro, down 0.1%.

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