Central, eastern currencies fall to weakest levels this year

WARSAW/BUDAPEST: Central and eastern European currencies fell to their weakest levels so far this year on Friday, as the dollar strengthened and bond yields rose further after US Federal Reserve Chair Jerome Powell pledged to stick to an easy monetary policy.

Powell on Thursday repeated his pledge to keep credit loose and flowing until Americans are back to work, rebutting investors who have openly doubted he can stick to that promise once the pandemic passes and the economy surges on its own.

“Jerome Powell’s words yesterday did not calm down the markets which led to a strengthening of the dollar and that is putting pressure on emerging markets,” a Budapest-based FX trader said.

At 0928 GMT the Hungarian forint was at its weakest point since November, slipping 0.40% against the euro at 366.20.

The Czech crown and the Polish zloty were both at their weakest so far this year. The crown was 0.30% softer at 26.31 versus the euro and the zloty was 0.32% weaker at 4.5715. Benchmark 10-year Polish bond yields were 6 basis points higher at 1.65% and Czech 10 year yields were 2.7 basis points lower at 1.755%, after having risen to 1.802% earlier in the session. The region’s main stock indices were 0.15-0.86% lower.