BUDAPEST: Easing fears of a British exit from the European Union boosted stocks and currencies across central and eastern Europe on Monday, with the zloty setting the tempo with a 0.6 percent gain.
Three opinion polls showed the 'remain' camp recovering some momentum before Britain's referendum on whether to leave the bloc, due on Thursday.
"The Polish zloty has the strongest potential to appreciate in the case of Bremain (back towards 4.30 EURPLN), while the Czech koruna has practically none, given the FX floor for the EURCZK," BNP Paribas said in a note.
"In the case of Bremain, we expect CEE currencies to erase all losses from the previous week."
In the case of a British exit, or Brexit, central banks in Croatia, Romania and Serbia would intervene to reduce volatility while Hungarian and Polish central banks would allow some depreciation and take action only in the case of excessive turbulence, BNP said.
Stock markets, and especially bank stocks, were sensitive to Brexit news as well, a Budapest-based dealer said. Hungary's OTP Bank gained 2.4 percent as the Budapest bourse hit region-high 1.7 percent rise in early morning trade.
The other exchange-traded bank, FHB was up 3.2 percent after plunging more than 10 percent on Friday. FHB said it would buy back a 112 million euro bond issued in 2012, which drew a fine from the central bank.
The move slashed FHB's capital adequacy to 10.8 percent from 16 percent, still above an 8 percent regulatory minimum but a sign of trouble around the bank, the lynchpin of the business empire of its embattled chairman, Zoltan Speder.
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