CEE MARKETS-FX extends losses as sentiment sours; Czech rate decision eyed

BUDAPEST, Sept 15 (Reuters) - Central European currencies extended losses on Tuesday, with Hungary's forint easing the most, reeling from a firmer U.S. dollar ahead of a Federal Reserve interest-rate decision, rising oil prices and U.S. Treasury yields.

• "Monday's shock – a post-weekend surge in energy prices, a rise in the 10-year U.S. Treasury yield to 5%, and a stronger U.S. dollar – hit CEE markets hard, weakening currencies and sharply repricing rates higher across the curve," ING said.

• "Although risk-off sentiment is likely to persist today, higher front-end rates should help cushion currencies against further losses and create scope for stabilisation."

• The forint weakened 0.4% to 367.00, while the Polish zloty was 0.2% weaker at 4.3455 per euro at 0730 GMT.

• "CEEMEA currencies also weakened as higher energy prices and developed-market rate expectations supported the dollar. The moves were consistent with broader pressure on emerging-market carry as investors moved toward USD liquidity ahead of major central-bank meetings," Morgan Stanley said.

• The main event of the week in the region will be Thursday's Czech National Bank interest-rate decision where the bank is expected to keep its benchmark rate at 3.75%.

• The crown was broadly flat at 24.293 per euro.

• Polish 10-year yield is at its highest in 3-1/2 years, since March 2023.

• "Bonds from the CEE-4 region—including Polish government bonds—performed very poorly; in our view, alongside global factors, they began to feel the pressure of regional geopolitics, specifically Russian provocations along NATO’s eastern flank," PKO BP said in a note.

• Hungary's central bank holds its next rate-setting meeting on September 22 when it will also release fresh economic forecasts.