* Forint on course for more than 6% loss in 2024 * Hungary, Czech c.banks have paused rate cut cycles * Zloty lone gainer in CEE this year * Analysts see little relief for FX in 2025 By Jason Hovet Dec 31 (Reuters) – Hungary’s forint, central Europe’s worst performer in 2024 with a loss of more than 6%, inched higher on Tuesday as it sought to end the year on a stronger note after falling to two-year lows in recent weeks. Central European currencies mostly drifted in the final trading day of 2024 while stock markets in the region were closed. Currencies have struggled to gain traction this year with only the Polish zloty posting a gain against the euro, the region’s reference currency. The forint and Czech crown have lost ground due to a combination of factors including a steady stream of rate cuts, sluggish economic activity, and a firming dollar cutting into risk appetite in emerging markets. Analysts see little relief in the New Year, with a Reuters poll at the start of December forecasting currencies to be roughly unchanged in one year’s time. “We are forecasting the crown to remain slightly on the strong side of 25 per euro next year and it will remain prone to a higher degree of volatility,” Czech bank CSOB said in a note. The crown was 0.1% higher on Tuesday, at 25.149 to the euro. It had briefly firmed past the psychological 25 level on Dec. 24 but has been stuck in a range between 25.00-25.50 in the second half of the year. CSOB noted the Czech central bank cut interest rates by 300 basis points in 2024, versus 100 bps of cuts by the European Central Bank, worsening the rate differential between the two. The Czech and Hungarian central banks paused their rate easing drives at the end of the year, and December was the first month since May 2023 – when Hungarian rates started falling – that all four central banks in the region kept policy on hold. Hungary’s central bank left its base rate steady at the European Union’s joint highest level of 6.5% this month due to a weak forint and tax hikes raising next year’s inflation path. The forint added 0.3% to trade at 410.00 to the euro on Tuesday. It hit a two-year low of 416.15 per euro on Dec. 19. It is down 6.5% this year, although it showed steeper losses in 2022. The forint remains vulnerable to any shifts in global sentiment at a time when billions of euros worth of EU funds are still suspended by Brussels. The zloty on the other hand has stood out among peers and was flat at 4.274 per euro, having gained 1.65% this year while touching four-year highs around 4.25. Markets will be closely watching the start of U.S. President-elect Donald Trump’s term next month with risks of tariffs a threat to central Europe’s export prospects. A higher U.S. rate path could also make central banks in the region more cautious on further policy easing while inflation risks, especially in services sectors, remain persistent. “2025 will be the year of the inauguration of the Trump presidency and, as a consequence, the Fed’s adaptive policy,” Poland-based DM BOS brokerage analyst Konrad Ryczko said in a note. “Markets are wondering to what extent the tough declarations regarding customs or tariffs will be implemented in the announced form or maybe they are only an introduction to negotiations, e.g. with China. CEE SNAPSHOT AT MARKETS 1110 CET CURRENCIES Latest Previo Daily Change us trade close change in 2024 Czech crown
0 Hungary
00 Polish
Romanian
Serbian
00 Note: daily calculated from 1800 CET change Latest Previo Daily Change us close change in 2024 Prague 1760.17 1760.1 0.00% 24.48 700 % Budapest 79326.66 79326. 0.00% 30.86 66 % Warsaw <.WIG20 2192.01 2192.0 0.00% -6.44% > 1 Bucharest 16720.75 16720. 0.00% 8.78% 75 Spread Daily vs Bund change in spread Poland 2-year
Poland
Note: FRA are for ask prices quotes **************************************************** ********** (Reporting by Jason Hovet in Prague; Editing by Sharon Singleton)
