March 17, 2017 / 4:07 PM / 4 months ago

CEE MARKETS-Currencies, stocks gain on rising risk appetite

7 Min Read

    * CEE fx shake off ECB comments on rate rise
    * Leu sets 9-month low before CEE fx rebound
    * Warsaw stocks at 20-mth high, Prague tests 16-mth peak

 (Recasts with rebound of currencies, rise in stocks)
    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, March 17 (Reuters) - Central European
currencies and stocks mostly firmed on Friday, supported by
increasing demand for riskier assets since the Federal Reserve
suggested this week that future U.S. rate rises will be gradual.
    Trade was volatile however.
    Currencies briefly slipped earlier in the day after ECB
policymaker Ewald Nowotny was quoted late on Thursday as saying
that the European Central Bank will decide whether to raise
rates before or after ending its bond purchase programme.

    With the region's central banks retaining loose monetary
policies, regional assets could become relatively less
attractive if euro zone yields rise.
    Currencies reversed course, however, when the euro fell
after a new French poll showed far-right anti-EU leader Marine
Le Pen extending her lead over centrist Emmanuel Macron in the
first round of France's presidential elections.
    The Hungarian forint firmed 0.3 percent to 308.40
against the euro by 1443 GMT, touching two-week highs, and the
zloty revisited Thursday's two-week highs.
    The leu, which in early trade touched a nine-month
low, was flat at 4.5575 against the euro. That is just above
4.56, the level at which the Romanian central bank has
intervened several times in recent years to support the
currency. 
    The leu has underperformed regional peers this
year due to worries that Romania's new leftist government will
increase the budget deficit.
    The International Monetary Fund echoed those concerns at a
news conference on Friday after regular consultations with the
Romanian government.
    Central European stocks were mostly on an uptrend. Warsaw's
blue chip index set a 20-month high in line with MSCI's
emerging equity index, boosted by the Fed's rate
outlook on Wednesday, and Prague tested 16-month highs.
    The Czech crown's euro exchange rates implied in forwards
contracts hovered around multi-month
lows.
    Czech central bank Vice-Governor Mojmir Hampl reiterated on
Thursday that the bank is likely to end the cap that keeps the
crown weaker than 27 against the euro around the
middle of the year.
    However, a Reuters poll on Thursday found most analysts see
the bank scrapping the cap at its May 4 policy meeting or
earlier.   
              CEE        SNAPS   AT  1543          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            00     45     2%      %
 Hungary                 308.4  309.3   +0.3  0.14%
 forint                    000    250     0%  
 Polish                  4.290  4.296   +0.1  2.64%
 zloty                       5      0     3%  
 Romanian                4.557  4.556  -0.02  -0.49
 leu                         5      7      %      %
 Croatian                7.410  7.421   +0.1  1.96%
 kuna                        0      1     5%  
 Serbian                 123.9  124.0   +0.0  -0.44
 dinar                     000    100     9%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  982.6  980.7   +0.1   +6.6
                             0      8     9%     2%
 Budapest                32749  33049  -0.91   +2.3
                           .59    .44      %     3%
 Warsaw                  2295.  2283.   +0.5   +17.
                            19     70     0%    83%
 Bucharest               7962.  7923.   +0.4   +12.
                            60     82     9%    39%
 Ljubljana               801.7  800.9   +0.0   +11.
                             2      8     9%    72%
 Zagreb                  2176.  2168.   +0.3   +9.1
                            77     63     8%     2%
 Belgrade     <.BELEX15  744.2  746.9  -0.36   +3.7
              >              9      7      %     5%
 Sofia                   635.9  624.3   +1.8   +8.4
                             2      1     6%     4%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.40   0.13   +037   +13b
              >              8           bps     ps
   5-year     <CZ5YT=RR  0.183  0.018   +051   +2bp
              >                          bps      s
   10-year    <CZ10YT=R  0.997  0.042   +056   +5bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  2.124  0.024   +290   +2bp
              >                          bps      s
   5-year     <PL5YT=RR  3.092  0.025   +342   +2bp
              >                          bps      s
   10-year    <PL10YT=R  3.747  0.018   +331   +2bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.29   0.34   0.44      0
              PRIBOR=>                        
 Hungary              <  0.325   0.44   0.59   0.23
              BUBOR=>                         
 Poland               <   1.76    1.8  1.845   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Jason Hovet in Prague and Anna Koper
in Warsaw; Editing by Robin Pomeroy and Susan Fenton)
  
 
 

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