Budapest shares tumble as OTP Bank leads losses amid Ukraine crisis

0

PRAGUE, Feb 22 (Reuters) – Shares in Budapest fell sharply on Tuesday in early trading, forecast for their biggest one-day drop since September 2020, with OTP Bank falling more than 4% following the Russian order to sending troops to two breakaway regions in eastern Ukraine shook the markets.

Currencies weakened, dragged down by the Czech koruna falling to a one-week low.

Tensions in Eastern Europe have rattled markets in recent weeks as Russia massed troops around Ukraine’s borders, raising fears in the West of an invasion.

Join now for FREE unlimited access to Reuters.com

Register

The crisis escalated on Monday night when Russian President Vladimir Putin ordered the Russian military to launch what Moscow called a peacekeeping operation in the region.

The escalation hit stock markets around the world on Tuesday, including in central Europe with Prague (.PX) down more than 1%, although Warsaw (.WIG20) rallied somewhat by mid-morning after hit its lowest level in more than nine months.

Budapest (.BUX) was the hardest hit, losing more than 3% at one point, and down 2.8% at 0907 GMT. The decline was led by OTP, which has operations in Ukraine and Russia, and fell more than 9% at the start of trading before regaining ground.

In the foreign exchange markets, the Polish zloty weakened 0.3% to 4.542 and the Czech koruna fell 0.4% to 24.465 per euro.

The Hungarian forint fell 0.2% to trade at 357.22 against the euro after hitting its lowest point in February as tensions in Ukraine put pressure on the currency ahead of a central bank decision on interest rates later in the day.

Analysts expect the bank to raise rates by 50 basis points as central European policymakers stick to steep rate hikes to fight soaring inflation. Some analysts said Hungary’s rise on Tuesday could be bigger than expected.

“The influence of macroeconomic factors will remain of secondary importance and the course of the session will be determined by information determining the likelihood of a military invasion in Europe,” said Millennium Bank in Warsaw.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Pawel Florkiewicz in Warsaw; Editing by Sherry Jacob-Phillips

Our standards: The Thomson Reuters Trust Principles.

Share.

Comments are closed.