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CEE MARKETS-Currencies retreat, Daimler investment long-term positive for Hungary
July 29, 2016 / 10:01 AM / a year ago

CEE MARKETS-Currencies retreat, Daimler investment long-term positive for Hungary

By Krisztina  Than
    BUDAPEST, July 29 (Reuters) - Central European currencies
eased slightly on Friday in edgy global sentiment before a first
estimate for Q2 U.S. growth, with the forint getting some
support from news of Daimler expanding its plant in Hungary.
    German carmaker Daimler put a 1 billion euro
price tag on the expansion of its existing factory, which
churned out 180,000 cars last year and is a significant driver
for the country's open economy. 
    Exports and rising domestic demand are the drivers for
Hungary's economy, which grew by 2.9 percent last year.
    "We do not expect a direct impact on the forint now, but the
1 billion euro investment could be forint-supportive indirectly,
and could lift already next year's GDP as construction (of the
new plant) will start," said Zoltan Varga, an analyst at
brokerage Equilor.
    Varga said the forint has outperformed the region's major
currencies thanks to Hungary's reduced vulnerabilities. It
quickly rebounded from a fall after Britain's referendum where
the majority of voters backed an exit from the European Union. 
    He said the Hungarian unit could trade between 310 and 317
versus the euro in the coming months. 
    The forint has firmed 0.8 percent so far this
year, while the zloty has weakened 2.5 percent.
    At 0849 GMT, the forint was down 0.2 percent from Thursday
at 312.20 in line with the Polish zloty, which also eased 0.2
percent from the previous day.
    The region's currencies got support from a this week's
decision by the Federal Reserve to leave U.S. interest rates
unchanged. Markets bet only one rate increase was likely later
in the year. 
    Rising U.S. interest rates would make emerging Europe's
assets less attractive than U.S. assets.
    In Romania, the anti-graft prosecutors arrested central bank
deputy governor Bogdan Olteanu on Friday in a corruption
investigation, the prosecutors said, the first arrest of a
leading central banker in the country. 
    The leu was unfazed by the move, trading flat.  
               CEE MARKETS  SNAPSH   AT  1049 CET            
                            OT                         
                            CURRENCIES                       
                            Latest  Previous  Daily    Change
                            bid     close     change   in
                                                       2016
 Czech crown                27.053   27.0370   -0.06%  -0.20%
                                 0                     
 Hungary                    312.20  311.5650   -0.20%   0.78%
 forint                         00                     
 Polish zloty               4.3675    4.3606   -0.16%  -2.51%
 Romanian leu               4.4660    4.4641   -0.04%   1.19%
 Croatian                   7.4820    7.4845   +0.03%   2.10%
 kuna                                                  
 Serbian                    123.11  123.2700   +0.13%  -1.33%
 dinar                          00                     
 Note: daily   calculated   previo  close at  1800           
 change        from         us                CET      
                            STOCKS                           
                            Latest  Previous  Daily    Change
                                    close     change   in
                                                       2016
 Prague                     888.21    887.26   +0.11%  -7.12%
 Budapest                   27616.  27628.47   -0.04%   +15.4
                                76                         5%
 Warsaw                     1777.5   1788.51   -0.61%  -4.39%
                                 7                     
 Bucharest                  6719.6   6694.09   +0.38%  -4.06%
                                 2                     
 Ljubljana                  711.17    714.45   -0.46%   +2.16
                                                            %
 Zagreb                     1770.0   1764.47   +0.32%   +4.76
                                 5                          %
 Belgrade                   640.99    621.30   +3.17%  -0.48%
 Sofia                      458.98    457.78   +0.26%  -0.42%
                            BONDS                            
                            Yield   Yield     Spread   Daily
                            (bid)   change    vs Bund  change
                                                       in
 Czech                                                 spread
 Republic                                              
   2-year                   -0.135     0.039   +047bp   +3bps
                                                    s  
   5-year                   -0.024    -0.041   +047bp   -5bps
                                                    s  
   10-year                   0.353    -0.048   +042bp   -6bps
                                                    s  
 Poland                                                      
   2-year                    1.716     0.027   +232bp   +1bps
                                                    s  
   5-year                    2.341     0.022   +284bp   +1bps
                                                    s  
   10-year                   2.938      0.03   +301bp   +2bps
                                                    s  
               FORWARD      RATE    AGREEMENT                
                            3x6     6x9       9x12     3M
                                                       interb
                                                       ank
 Czech Rep             <PR    0.29      0.26     0.22       0
               IBOR=>                                  
 Hungary               <BU     0.8      0.77     0.78    0.93
               BOR=>                                   
 Poland                <WI   1.705      1.66    1.645    1.71
               BOR=>                                   
 Note: FRA     are for ask                                   
 quotes        prices                                  
 ************************************************************
 **
 
 (Reporting by Reuters bureaus; Editing by Tom Heneghan)

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