BUDAPEST- Central European currencies weakened on Wednesday, with the forint easing to a one-week low versus the euro, as investors turned cautious on signs of a slower-than-expected economic revival after countries reported a resurgence in COVID-19 cases.
"Markets are hoping for a recovery sooner or later," said an FX trader in Budapest.
"But free money will not make the virus go away, and this constant pressure will stay with us," he said.
The forint and the crown both plunged on Tuesday after dismal industrial output data in Central Europe showed a slower-than-expected recovery from the economic crisis caused by the pandemic.
The forint was down 0.33% on Wednesday and trading at 355.05 versus the euro, a one-week low.
Investors will also closely watch the minutes of the last rate-setting meeting of the Hungarian central bank due later in the day, Erste Bank said in a note.
The National Bank of Hungary unexpectedly cut its base rate by 0.15 basis points to 0.75% at its June 23 meeting. The bank's deputy governor later said the NBH may cut its base rate by another 15 basis points this month.
Elsewhere, the Polish zloty was mostly stable, down 0,06% and trading at 4.476 to the common currency.
The Czech crown eased 0.13% to 26.730 versus the euro.
The Czech parliament will once again vote on the third extension of this year's budget deficit to as much as 9% of economic output, far above the EU's 3% normal threshold.
"As the approval of the budget seems likely today CZK might continue its sideways trade," Commerzbank said in a note.
Stocks in the region were mixed, with Prague gaining 0.3% and Budapest up 0.24%. Bucharest's blue-chip index gained 0.15%, while Warsaw was down 0.45%.
(Additional reporting by Jason Hovet in Prague, Editing by Sherry Jacob-Phillips) ((komuves.anita@thomsonreuters.com (+36 70 795 8815)) DIARY Diaries Index IND/DIARY ))
