Coronavirus infections push for the forint near record high

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Anita Komuves BUDAPEST, Aug. 17 - Global market uncertainty over the spread of coronavirus infections pushed by the Delta variant and weak economic data from China and the United States. The Hungarian forint weakened 0.17% to 351.90 per euro, still trading near five week highs that it hit in the last session. The forint has recently been assisted by the rate hike cycle that the central bank began in June in order to combat inflation as the economy recovers from the pandemic crisis. The country's economy grew 2.7% quarter-on-quarter in the April-June period, data showed on Tuesday. The market mood is a bit uncertain because of the spread of Delta variant and the events in Afghanistan. I do not expect the forint to firm past 350 in the near future, a Budapest-based trader said. It will not significantly weaken either, as we keep seeing zloty-forint flows that support the forint. The difference between Poland and Hungary has caused flows in the ZlotyForint market in the past weeks, traders and analysts said. Contrary to the Czech and Hungarian Central Banks, which started tightening policy in June to fight inflation, the National Bank of Poland has kept its dovish stance. Faster inflation readings may be gradually impacting views on the MPC, but will not result in concrete action in the next quarter or so. Meanwhile, the negative real interest rate is weighing down on the zloty exchange rate, Commerzbank wrote. The zloty is also faced by external conditions such as waning global risk taking due to weak data from China and tensions in Afghanistan as well as Polish's conflict with the European Union, Bank Millennium said in a note. The common zloty slipped 0.15% to 4.5680 against the Polish currency. Elsewhere, the Czech crown was 0.16% lower and trading at 25.465 in the Euro. The Romanian lua edged 0.9% back to 4.9215 euro. Stocks in the region were mixed, with Warsaw up 0.7% and hitting another record high while Budapest gained 0.2%. Bucharest was less flat while Prague was 0.24% lower.