Headlines
Hungary gets permission to start EU/IMF loan talks
The Polish central bank has begun to sound dovish
On Friday, rising risk aversion weighed on Central European currencies. The Hungarian forint posted some losses despite the fact that the country got permission to start talks with international lenders on the new stand-by loan. Recall, the Hungarian parliament amended to a controversial central bank law and therefore fulfilled the necessary condition to stop infringement process which is being led against the country. Still new plans of Orban’s administration can still complicate EU/IMF talks - the government considers levying the tax on the central bank transactions with commercial banks. Andras Simor, the central bank’s governor, already warned that such a move would be “dangerous and illegal”.
In the meantime, the market was digesting outcomes of Wednesday’s meeting of the National Bank of Poland (NBP). As expected, the Monetary Policy Council (MPC) kept interest rates unchanged. The overall message was, however, significantly more dovish than in previous months. Mr. Belka, the NBP governor, said in a press conference that his concerns with growth were this time bigger than those with inflation. Hence, outcomes were more or less in line with our expectations and confirm our view that the official rate will remain stable throughout the rest of this year.
| Currencies | % chng | |
| EUR/CZK | 25.67 | 0.2 |
| EUR/HUF | 289.1 | 1.0 |
| EUR/PLN | 4.24 | 0.8 |
| EUR/USD | 1.23 | -0.8 |
| EUR/CHF | 1.20 | 0.0 |
| FRA 3x6 | % | bps chng |
| CZK | 0.98 | -2 |
| HUF | 7.17 | 9 |
| PLN | 5.11 | 0 |
| EUR | 0.44 | 0 |
| GB | % | bps chng |
| Czech Rep. 10Y | 2.88 | -6 |
| Hungary 10Y | 7.97 | 10 |
| Poland 10Y | 5.16 | 2 |
| Slovakia 9Y | 5.94 | 5 |
| CDS 5Y | % | bps chng |
| Czech Rep. | 131 | -1 |
| Hungary | 500 | 4 |
| Poland | 208 | 0 |
| Slovakia | 238 | -8 |
