CEE MARKETS-Zloty, forint slide as Polish political row weighs

By Anita Komuves BUDAPEST, Aug 11 (Reuters) – The Polish zloty and the Hungarian forint fell on Wednesday as a political row in Warsaw caused uncertainty in central European markets, while pandemic worries, rising U.S. treasury yields and a stronger dollar also dented sentiment. The Polish zloty was 0.23% weaker, trading at 4.5875 per euro after the country’s prime minister on Tuesday dismissed the head of a junior coalition partner from the government, creating uncertainty over the future of the administration. Besides the risk-averse global sentiment and Warsaw’s disputes with the European Union, the zloty is now pressured by the political row as well, analysts said. “Political risk, I think, is always associated with some uncertainty, in which case the currency may be weakening,” Mateusz Bieniek, chief dealer at Santander said. “In addition, other countries are raising interest rates, while the Polish central bank remains dovish.” Raising Polish interest rates would be too risky at the moment, central banker Eryk Lon said in comments published on Wednesday. The Hungarian forint slid 0.42% to 355.00 versus the common currency. A stronger dollar, rising U.S. treasury yields and a risk-averse investor mood are putting pressure on the forint and other emerging currencies, two FX traders in Budapest said. “Gloomy data from Germany yesterday soured the mood and weakened the forint,” one trader said. Investor sentiment in Germany deteriorated for the third month in a row in August on fears that a fourth wave of coronavirus cases could hold back recovery, data published on Tuesday showed. “The political crisis in Poland is causing uncertainty in the region and could be affecting the forint as well,” another trader said. The Czech crown bucked the trend and firmed 0.11% to 25.386 per euro, propped up by higher-than-expected CPI data published on Tuesday that fuelled expectations of a bigger-than-usual rate hike at the next central bank meeting. The Romanian leu edged lower as data showed that inflation quickened to 4.95% on the year in July from 3.94% in June, above expectations. Stocks in the region were mixed, with Prague adding 0.92% and climbing to a 10-year high. Budapest was up 0.14% while Warsaw slid 0.2%. CEE SNAPSHO AT MARKETS T 1046 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 1249.03 1237.650 +0.92% +21.60 0 % .BUX Budapest 49921.2 49849.71 +0.14% +18.56 5 % .WIG20 Warsaw 2272.71 2277.23 -0.20% +14.55 % .BETI Buchares 12102.2 12047.24 +0.46% +23.42 t 7 % .SBITO Ljubljan <.SBITOP 1181.64 1178.83 +0.24% +31.17 P a > % .CRBEX Zagreb 1965.57 1963.92 +0.08% +13.01 % .BELEX Belgrade <.BELEX1 785.10 785.10 +0.00% +4.87% 15 5> .SOFIX Sofia 578.70 579.99 -0.22% +29.31 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year s CZ5YT= 5-year s CZ10YT s Poland PL2YT= 2-year s PL5YT= 5-year s PL10YT s FORWARD 3×6 6×9 9×12 3M interba nk Czech 1.62 2.04 2.24 0.95 Rep Hungary 2.07 2.23 2.32 1.35 Poland 0.47 0.70 0.97 0.21 Note: are for ask FRA prices quotes ********************************************** **************** (Additional reporting by Alicja Ptak in Warsaw; Editing by Ramakrishnan M.)