CEE currencies firm on soft dollar, Hungary cbank signals rate cuts on table — TradingView News

Hungary’s forint firmed on Thursday after its central bank signalled possible interest rate cuts, with broader central European currencies also rising as the dollar dipped ahead of PMI data releases from major economies.

Options for a 75 basis point and 100 basis point rate cut will be on the table at the next meeting of Hungary’s central bank on Feb. 27, Deputy Governor Barnabas Virag said in an interview on news site Index.hu published on Thursday.

“There are new arguments supporting both options, so the outcome of the rate decision is entirely open,” Virag said.

Hungary’s forint EURHUF firmed 0.2% to the euro a a 10-day high of 386.6 by 0812 GMT.

“There is not much of a difference between a 75 or 100 basis points cut, it is the weakening dollar that is underlying the firming of the currency,” a Budapest-based trader said.

Last month, the National Bank of Hungary (NBH) cut its base rate (HUINT.ECI) by 75 bps to 10%, holding off on larger cuts amid a rise in market risks.

Two of nine rate setters wanted to cut interest rates by 100 bps but falls in the forint derailed plan to accelerate the pace of easing from a monthly 75 bps, according to minutes of the January meeting.

Investors await a raft of PMI data to gauge the health of major economies and what that may mean for global interest rates, after minutes of the Federal Reserve’s latest policy meeting released on Wednesday reinforced the message that the central bank is in no hurry to ease rates.

The Polish zloty EURPLN firmed by 0.4% to 4.31 per euro, hovering around a 10-days high.

“The base scenario for EURPLN is to maintain the current levels, but we do not rule out a test of the level of 4.29-4.30 in the next hours,” Poland’s development bank BGK said in a note.

The EU was poised to release 6.3 billion euros in pandemic recovery funds for Poland as early as next week after holding them up in the rule of law clash with the previous government, Bloomberg reported on Wednesday, which analysts said supported the currency.

The Czech crown EURCZK traded at 25.27, up by 0.2%.