The Hungarian forint has reached an all-time low, and the Polish zloty has stalled at its lowest level in 12 years against the euro on Monday, under pressure from fears of a worsening pandemic in Central and Eastern Europe and the pursuit of safe assets.

The Czech koruna was at its lowest level since November 4, the day when the country’s central bank surprised with the most dramatic interest rate hike in almost a quarter of a century, Reuters notes, Mediafax reports.

Even in the context of accelerating interest rate hikes in the region to counteract the intensification of inflation, Central European assets are suffering from renewed fears of lockdowns and declining investor appetite amid the chase for safe assets boosting the US dollar.

The Hungarian forint depreciated by 0.6% to 369.61 against the euro, surpassing the previous record reached last year when the pandemic hit Hungary for the first time. The country reported a record number of daily infections on November 19, although most of its population is vaccinated, raising fears of economic impact.

The country’s central bank raised the one-week deposit interest rate by 70 basis points to 2.5% on November 18 to support the forint, just two weeks after a lower reference interest rate hike, Bloomberg reports.

But as in the case of neighboring Czech and Polish countries, which made even higher interest rates this month, monetary tightening measures have not been enough to allay investor concerns.

Although the Hungarian central bank does not have a target for forint, the level of the currency complicates the task of strategies for obtaining price stability in the conditions in which its depreciation fuels inflation. Consumer prices rose 6.5% in October, the highest rate since 2012 and well above the central bank’s 3% target. Strategies anticipate that inflation will rise above 7% in November.

Hungarian consumer confidence fell to its lowest level in April, according to the GKI think tank, with households becoming more pessimistic about jobs and the financial outlook amid rising inflation, Reuters reported.

Political tensions in the region are also intensifying, with a migrant crisis on Poland’s border with Belarus, while Warsaw and Budapest continue to clash with Brussels.

The zloty fell 0.5% to 4.716 against the euro. “The outlook for the Polish currency remains moderately pessimistic,” Bank Millennium analysts say.

The Czech koruna was at its lowest level since November 4, the day the country’s central bank surprised with the sharpest interest rate hike in nearly a quarter of a second. Tomas Holub, a member of the central bank’s board, said he did not expect major surprises in the future in terms of tightening monetary policy.

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