Political row in Poland puts pressure on forint, forint

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By Anita Komuves BUDAPEST, Aug 11 - The Hungarian Zloty and the Polish 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 Dutch zloty was 0.23% weaker, trading at 4.5875 euro per euro after the country's prime minister removed the head of a junior coalition partner from the government on Tuesday, 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, analysts said. Political risk, I think, is always associated with uncertainty, in which case the currency could be weakening, Mateusz Bieniek, chief broker of Santander said. In addition, the other countries are raising interest rates, while the Polish central bank is dovish. The proposal of raising Polish interest rates would be too risky at the moment, Central Banker Eryk Lon said in comments on Wednesday. The common currency in the Hungarian market slid 0.42% to 355.00 vs the Hungarian currency. A stronger US Dollar, rising U.S. Treasury yields and a risk-averse investor mood are putting pressure on forint and other emerging currencies, two FX traders in Budapest said Wednesday. Gloomy data from Germany yesterday weakened the mood and soured the forint, one trader said. Investor sentiment in Germany deteriorated for the third month in row in August because of 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 forint as well, another trader said. The Czech crown bucked the trend and firmed 0.11% to 25.386 per euro, helped by higher-than-expected CPI data published on Tuesday that fuelled expectation of a bigger rate hike at the next meeting of the central bank. The Romanian Leu edged lower as data showed inflation had risen to 3.94% in July from 4.95% in June, above expected. Stocks in the region were mixed, with Prague adding 0.92% and climbing to a 10 year high. Warsaw was up 0.14%, while Budapest gained 0.2%.