Forint rises after Hungary hikes interest rates

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Forint rises after Hungary hikes interest rates

PRAGUE, December 16, Reuters -- The forint, which had fallen to near record lows in recent trading, rose on Thursday after the Hungarian central bank hiked interest rate hikes while Czech bond yields climbed further to new peaks. Markets were calm as they took the U.S. Fed's policy tightening plans unveiled on Wednesday evening, and investors turned their attention to the European Central Bank meeting on Thursday to get further direction. The forint is trading within 1% of a record low of 372 to the euro. It was up 0.4% in morning trade to 368.53 to the euro. The move up came after the Hungarian central bank raised its one-week deposit rate by 30 basis points to 3.6% as expected, part of tightening efforts to tackle inflation that has surged to a 14 year high. Despite a series of rate hikes last month, the forint has been held back by a nervous global mood amid new Pandemic worries and the strength of the U.S. dollar in anticipation of a faster Fed exit from pandemic-era bond buying, which has weighed on emerging markets. The Polish zloty and Czech crown bucked the trend and drifted sideways, trading at 4.633 and 25.267, respectively., to the euro. The crown has been helped by Czech central banker comments this week showing above-standard interest rate hikes are still up for debate when rate setters meet next week. The Czech central bank lifted its base rate by 200 basis points at its last two meetings, despite the fact that it has been the most aggressive in policy tightening among peers in the region. The 5 year benchmark yield is the highest in a decade for Czech bond yields, with the 5 year benchmark yield the highest in a decade. A Czech T-bill tender at midday could draw good demand from market players looking to store cash before the turn of the year, dealers said.