The Russian war in Ukraine has hit the central European currencies hard and investors are seeking to invest in safer assets. To reduce currency losses in the Forex market, the central banks of Poland and the Czech Republic have placed a cap to mitigate excessive fluctuations.
The Czech crown immediately was up by 0.64 percent after the measure was announced and traded at 25.635 per euro. However, the Polish zloty is still awaited to witness the same response in the market. It traded at 4.8360 per euro. A report reveals through an anonymous source that the National Bank of Poland has taken measures while coordinating with the central bank of the Czech Republic.
Meanwhile, the National Bank of Hungary raised the one-week deposit rate to overcome temporary market volatility. It was 75 basis points and the hike is said to be the biggest since 2008.
The Hungarian forint traded down by 0.47 percent immediately after the announcement at 382 per euro and it managed to pullback from the losses. Analysts still believe more actions are required to shore up the native currency as a significant change is yet to be achieved.
The recovery of the forint was witnessed slowest compared to the currencies of the other two countries. Stocks fell in the region.Bucharest was down by 5.14 percent while Budapest was lower by 1.91 percent.
Meanwhile, shares of OTP Bank in Hungary dipped 1.27 percent as its Q4 profit missed expectations. TheCEO of the bank said they look for remaining in Ukraine and Russia for a longperiod.
Following the Russian invasion of Ukraine, the stock of OTP lost one-third of its value.
Russia invaded on February 24 and the war has entered the third month in a row. Russian troops, missiles and airstrikes have destroyed several cities and towns in Ukraine. Millions of Ukrainians are displaced and taken shelter in neighboring countries.