* Currencies firm on flat Polish rates, fading Fed hike
* Warsaw stocks outperform, Budapest hits new 9-year-high
* Czech central bank steps up euro buying to defend crown
* Bonds firm, mainly in 5-year segment, Hungary leads
(Adds Polish rate decision, bonds, Hungarian budget figures,
By Sandor Peto
BUDAPEST, Sept 7 Polish assets led gains in
Central European markets on Wednesday as the country's central
bank kept interest rates on hold at its meeting rather than
Regional assets were also helped by Tuesday's weak U.S.
services sector data, which dampened expectations for an
interest rate hike by the Federal Reserve.
The zloty and the forint firmed 0.4
percent against the euro by 1058 GMT. The forint traded 308.55,
just shy of 6-month-highs.
The Polish central bank kept its main interest rate
unchanged at 1.5 percent as expected even though inflation has
been negative for years. [ ]
Investors will watch the bank's comments to see whether it
is worried by recent disappointing industrial output and
manufacturing figures in the region and its main trade partner
Economic growth in Poland and the Central European region
still outpaces the euro zone by a considerable margin.
"Speculation on rate cuts in Poland could re-emerge again
from time to time in case of unsupportive economic data,"
Raiffeisen analyst Wolfgang Ernst said in a note.
Warsaw's blue-chip stock index rose by 0.7 percent
to a 16-day high, while Central European indices were mixed,
with the region's 2015 and 2016 top performer Budapest
touching a new 9-year high.
Government bonds firmed, with gains concentrated on 5-year
papers whose yields dropped by 10 basis points to 1.89 percent
in Hungary, by 4 basis points to 2.15 percent in Poland and by 6
basis points to -0.13 percent in the Czech Republic.
One Budapest-based fixed income trader said fading
expectations for Fed rate hikes boosted local bonds rather than
government budget figures, which showed the lowest deficit for
the January-August period for 15 years.
The Czech crown, trading steady at 27.023 against
the euro, stayed at the three-year-old cap near 27, which the
Czech central bank (CNB) defends with euro buying.
Czech foreign currency reserves jumped in August, suggesting
the bank has stepped up interventions to keep the crown weak as
the end of its intervention policy comes into sight.
"It is worth noting that CNB's forex reserves still
represent 'only' around 40 percent of the Czech GDP, which is
significantly less than the Swiss central bank, when it abruptly
cancelled its EUR/CHF floor (last year)," KBC analysts said in a
Board member Vojtech Benda said there was a preference for a
"clean, one-off" exit from the cap, which the bank plans to drop
around the middle of next year.
CEE SNAPSHOT AT 1258 CET
Latest Previous Daily Chang
bid close change in
Czech 27.0240 27.0220 -0.01% -0.10
Hungary 308.5500 309.7350 +0.38 1.97%
Polish 4.3230 4.3408 +0.41 -1.50
zloty % %
Romanian 4.4520 4.4530 +0.02 1.50%
Croatian 7.4890 7.4915 +0.03 2.00%
Serbian 123.2600 123.3200 +0.05 -1.45
dinar % %
Note: calculated previous close at 1800
daily from CET
Latest Previous Daily Chang
close change in
Prague 879.43 882.42 -0.34% -8.04
Budapest 28610.81 28597.82 +0.05 +19.
Warsaw 1803.88 1790.83 +0.73 -2.97
Buchares 7044.54 7038.71 +0.08 +0.5
t % 7%
Ljubljan 732.79 732.59 +0.03 +5.2
a % 6%
Zagreb 1832.69 1824.81 +0.43 +8.4
Belgrade 637.79 632.63 +0.82 -0.98
Sofia 470.48 471.87 -0.29% +2.0
Yield Yield Spread Daily
(bid) change vs chang
Bund e in
2-year -0.273 -0.006 +040b +0bp
5-year -0.13 -0.056 +043b -5bps
<CZ10YT=RR 0.28 0 +039b +1bp
10-year > ps s
2-year 1.657 -0.022 +233b -2bps
5-year 2.153 -0.037 +271b -3bps
<PL10YT=RR 2.757 -0.026 +287b -1bps
10-year > ps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech <P 0.28 0.25 0.21 0
Hungary <B 0.725 0.68 0.7 0.88
Poland <W 1.7 1.66 1.63 1.71
Note: are for
FRA ask prices
(Additional reporting by Igor Ilic in Zagreb; Editing by Gareth