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CEE MARKETS-Zloty retreats from 11-month highs, Czechs hold bond auction
March 29, 2017 / 9:39 AM / 5 months ago

CEE MARKETS-Zloty retreats from 11-month highs, Czechs hold bond auction

    * Zloty retreats, optimism over economy can lift it further
    * Hungarian central bank says depo cut maintains loose
conditions
    * Czech crown sets 4-month high in 1-month forwards deals

    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, March 29 (Reuters) - Central European
currencies eased on Wednesday after Hungary's central bank
continued to squeeze funds from its 3-month deposits, while
Poland's zloty retreated from 11-month highs.
    In Prague, the crown set a new 4-month high in one-month
forwards contracts at 26.9 against the euro ahead
of an auction of government bonds.
    A moderate rise in the region's biggest stock markets, led
by a 0.4 percent gain in Budapest and Warsaw
indicated some recovery in risk appetite, after a setback in
global markets early this week.
    The forint and the zloty eased 0.1
percent against the euro. The zloty traded at 4.2372.
    On Tuesday the zloty surged to an 11-month high, after
Deputy Prime Minister Mateusz Morawiecki said Polish economic
growth could exceed the 3.6 percent official forecast this year.

    The zloty and Warsaw stocks are strong regional
outperformers, with respective gains of 3.9 and 14.7 percent
this year, after a hit from a shift to less business-friendly
policies since late 2015 under the conservative cabinet.
    U.S. and Asian investors, the biggest buyers, focus on
improved Polish economic data and assessments from rating
agencies, one Warsaw-based trader said.
    "Zloty also passed through all recent technical resistance
levels, including 200-week average and technically a trend
reversal seems unlikely," the trader said, adding that the next
resistance was at 4.21-4.22.
    Analysts expect the zloty to firm further and retreat into
the 4.23-4.25 range after finding a resistance.
    The forint traded near the 310 psychological line, but did
not weaken through it.
    The Hungarian central bank announced a bigger than expected
cut in its 3-month deposits on Tuesday.
    Analysts mostly interpreted that as a dovish measure.
    The bank explained in a 20-page study, confirmed in comments
from its Deputy Governor Marton Nagy, that considering other
market factors, its measure maintained the earlier level of
interbank liquidity rather than boosting it.
    "The truth could be in between the two," one fixed income
trader said, adding that Hungarian debt yields dropped anyway,
mainly in short maturities, with 3-month yields trading at 1.23
percent, down 7 basis points from Tuesday's fixing.
    The Czech Republic auctions two bonds. The government added
this auction to its March sales early this week to benefit from
low yields.
    The Czech central bank will hold its last regular meeting on
Thursday before the expiry of its hard commitment to retain its
cap on the crown currency at 27 against the euro until the end
of the first quarter. It is uncertain how Czech markets will
move in the short term after the cap is removed.   
              CEE        SNAPS   AT  1048          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02  -0.01  -0.06
                            20     05      %      %
 Hungary                 309.9  309.6  -0.10  -0.35
 forint                    000    050      %      %
 Polish                  4.237  4.234  -0.07  3.93%
 zloty                       2      3      %  
 Romanian                4.555  4.556   +0.0  -0.45
 leu                         5      3     2%      %
 Croatian                7.440  7.436  -0.05  1.55%
 kuna                        0      5      %  
 Serbian                 123.7  123.9   +0.1  -0.36
 dinar                     900    100     0%      %
 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                  985.6  983.2   +0.2   +6.9
                             9      2     5%     5%
 Budapest                32411  32294   +0.3   +1.2
                           .84    .03     6%     8%
 Warsaw                  2234.  2225.   +0.4   +14.
                            43     41     1%    71%
 Bucharest               7965.  7953.   +0.1   +12.
                            14     88     4%    42%
 Ljubljana               783.4  787.3  -0.48   +9.1
                             9      0      %     8%
 Zagreb                  2024.  2077.  -2.53   +1.4
                            54     12      %     9%
 Belgrade     <.BELEX15  738.5  739.4  -0.12   +2.9
              >              6      4      %     5%
 Sofia                   635.6  636.2  -0.10   +8.3
                             3      9      %     9%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.49      0   +022   +1bp
              >              1           bps      s
   5-year     <CZ5YT=RR  0.205  0.051   +053   +7bp
              >                          bps      s
   10-year    <CZ10YT=R  0.966      0   +058  -1bps
              R>                         bps  
 Poland                                            
   2-year     <PL2YT=RR  2.044  0.003   +275   +1bp
              >                          bps      s
   5-year     <PL5YT=RR   2.96  0.014   +329   +3bp
              >                          bps      s
   10-year    <PL10YT=R  3.552  0.048   +317   +4bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.29   0.32    0.4      0
              PRIBOR=>                        
 Hungary              <   0.24   0.27   0.36   0.21
              BUBOR=>                         
 Poland               <   1.77   1.79   1.83   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Jason Hovet in Prague)
  
 
 

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