Polish zloty eases on surging COVID-19 cases, stocks mixed

BUCHAREST: The Polish zloty eased against the euro on Thursday as Warsaw reported its highest daily rise in new coronavirus cases, stoking concerns about extended lockdowns, while other central European currencies and stocks were mixed.

By 1035 GMT, the zloty was 0.3% down against the euro at 4.6350.

Poland reported a record 34,151 new daily coronavirus cases on Thursday, the highest since the start of the pandemic, with the government expected to announce more restrictions as hospitals struggle to treat COVID-19 patients.

Elsewhere in the region, the Czech crown eased off a two-week low hit in the previous session and was flat against the euro at 26.2650.

On Wednesday, the Czech central bank left interest rates unchanged and warned it would not rush to begin raising borrowing costs as the pandemic elevated risks.

"We think that the (bank's) view has remained relatively unchanged and that it will continue to look for an opportunity to start normalising its monetary policy," Morgan Stanley said in a research note.

"We maintain our view that the MPC will start seeing higher chances of a rate hike only in 3Q21."

Earlier this month, Hungarian and Romanian central banks also left interest rates unchanged, saying inflation spikes were likely temporary and pledging to curb sustained rises.

"We think central banks in the CEE region will look through this temporary increase in inflation and will refrain from tightening policy while economies remain on a recovery track," Goldman Sachs said in a note.

"With Czech inflation likely to weaken in the second half of this year, we expect the first rate hike to be delayed until 2022Q1, which is significantly more dovish than current market pricing."

The Romanian leu was 0.1% up against the euro, while the Hungarian forint held steady at 364.7000. The forint firmed on Wednesday, supported by the central bank's FX swap tender, which policymakers use to provide euro liquidity and ease selling pressure on the forint.

Stock markets were mixed, with Prague's and Hungary's down 0.2% and 0.1%, respectively, Warsaw's flat and Bucharest's up 0.5%.