Friday, 11 September 2015 17:16
PRAGUE: Central European stocks fell on Friday after a small rally while currencies edged up or held onto recent gains as investors pulled back before the US Federal Reserve meets next week.
In Serbia, the dinar was a tad stronger after falling on Thursday when the central bank cut rates for the sixth time this year to spur credit activity and growth.
Some analysts said the rate cut made the dinar more volatile to external pressures, potentially leading to a significant depreciation in the case of a US rate hike.
Central and Eastern European markets have been focused on the Fed meeting next week since any US rate rise might reduce investor appetite for riskier assets.
Stocks fell on Friday along with other global markets but have recovered somewhat in choppy trade this month after a fall in August when Chinese slowdown worries rattled markets.
Budapest fell the most to end the week, shedding 0.7 percent, and Prague dropped 0.5 percent to dip below the psychological 1,000 point barrier.
The region’s main currencies have also pointed stronger this month, helped by economic stability and 3-4 percent growth shielding them from the shocks that have hit other emerging markets on fear over China and falling commodities prices.
The Polish zloty, the region’s most liquid currency, rose 0.1 percent to trade at 4.4.209 to the euro on Friday. Romania’s leu was flat at 4.416.
“With the Romanian currency nearing what we believe to be one of the central bank’s “lines in the sand” at 4.40/euro, FX interventions to curb strengthening are possible if firming pressure continues,” ING Bank said in a note.
“The euro/leu could move higher next week, likely to start with relevant economic data coming out of China and continue with the Fed policy meeting.”
In Prague, the crown was down a touch at 27.076, off the central bank’s exchange rate floor. The bank has said several times in the past week it would not exit its weak crown policy before the second half of 2016.
