By Anita Komuves BUDAPEST, Aug. 25 (Reuters) – The forint added to its gains on Wednesday a day after the Hungarian central bank raised its key rate for the third time in a row and announced that it was starting to phase out its program quantitative easing. The forint was up 0.17% on the day and traded at a two-month high of 347.75 per euro. The currency has strengthened nearly half a percent since Tuesday’s rate hike. Hungary’s central bank raised its policy rate by 30 basis points to 1.5%, as planned, in order to contain higher-than-expected inflation. The bank reiterated that it will continue the cycle of interest rate hikes until the inflation outlook stabilizes around its sustainable target, but removed a previous reference to monthly milestones from its statement. . Some market participants interpreted this as a sign that the central bank had not committed to another rate hike in September, which could bring some uncertainty to the forint market, traders and analysts said. “There were telltale signs that the MPC could soon claim that it has done enough,” Commerzbank wrote. The central bank also said its weekly amount of bond purchases will be reduced to 50 billion forints from 60 billion forints as of this week. “This cautious decrease supports the forint as it tightens the currency’s supply,” said an FX trader in Budapest. Government bond yields on the long end of the curve were hardly affected by the central bank’s announcement, traders said. They edged up 2-3 basis points after Tuesday’s decision and remained unchanged on Wednesday. The yield on the 10-year bond was 2.83%. “The secondary market is calm and the effect of lower yields will be felt after Thursday’s auction from the Government Debt Management Agency,” said a fixed income trader. Elsewhere, the Czech crown added 0.09% and was trading at 25.510 to the euro. The Polish zloty strengthened 0.15% to 4.5670 against the common currency. “The divergence between the monetary policy conducted by the Polish central bank and other banks in the region will continue to deepen. The Czech central bank is also gradually normalizing its monetary policy,” writes PKO Bank in a note. Stocks in the region were mixed, with Budapest stocks weakening 0.79% while Prague stocks gaining 0.22%. Warsaw shares remained stable and Bucharest added 0.4% CEE SNAPSHO AT MARKETS T 1048 CET CURRENC IES Last daily offer close variation in 2021 EURCZK = Czech EURHUF = Hungary 0 EURPLN = Polish EURRON = Romania EURHRK = Croatia EURRSD = Serbian 0 Note: calculated from 1800 daily CET change Last previous daily change close change in 2021 .PX Prague 1288.96 1286.180 + 0.22% +25.49 0% .BUX Budapes 51225.7 51633.85 -0.79% +21.65 t 8% .WIG20 Warsaw 2300.79 2300.90 -0.00% + 15.97%. BETI Bucare 12,247.8 12,199.46 + 0.40% + 24.91 st 0% .SBITOP Ljublja <.sbitop na> % .CRBEX Zagreb 1961.39 1961.18 + 0.01% + 12.77% .BELEX1 Belgrad <.belex1 e> .SOFIX Sofia 570.09 573.39 -0.58% + 27.39% Yield Yield Spread Daily variation (bid) vs Bund variation of the Czech spread Republished CZ2YT = R s CZ5YT = R s CZ10YT = s Poland PL2YT = R s PL5YT = R s PL10YT = s FORWARD 3×6 6×9 9×12 3M Czech interbank 1.63 2.08 2.22 0.97 Czech Rep. Hungary 2.20 2.29 2.39 1.44 Poland 0.43 0. 64 0.86 0.21 Note: are for requesting quotes FRA ******************** ******************* ****** ******************** (Additional reporting by Alan Charlish in Warsaw; Editing by Giles Elgood)

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