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CEE MARKETS-Leu extends loss on mortgages bill, Zagreb stocks firm
October 10, 2016 / 9:01 AM / a year ago

CEE MARKETS-Leu extends loss on mortgages bill, Zagreb stocks firm

* Leu hits 3-month low, committees seen passing CHF
mortgages bill
    * Zagreb stocks extend rallies as coalition talks seen
succeeding
    * Forint off 17-month high on profit-taking, protests
    * Czech CPI below forecast, cbank reaffirms crown cap
commitment

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, Oct 10 (Reuters) - The leu eased on
Monday ahead of a likely approval by Romanian parliament
committees of a bill that would lay out the rules for the
conversion of Swiss franc mortgages. 
    Legislative efforts to get rid of toxic Swiss franc
mortgages, which soured due to a surge of the franc, have caused
jitters in Central European markets in recent years, including
Poland and Hungary.
    The Romanian leu shed 0.2 percent to 4.519 against
the euro by 0814 GMT, setting 3-month lows.
    It remains unclear how much the bill, which could be passed
by parliament on Tuesday, could boost the costs of banks.
    The concerns could weigh on an auction of 2020-expiry
Romanian government bonds. The yield on five-year bonds was bid
at 2.26 percent, up 5 basis points, while Polish bond yields
dropped by 2 basis points,
    "Uncertainty is still considerable," UniCredit analysts said
in a note.
    If pressure on the leu does not ease, the Romanian central
bank could tighten leu liquidity in interbank markets and that
could put further upward pressure on Romanian debt yields,
Raiffeisen analyst Imre Stephan said in a note.
    "Political risks due to positioning for December's
parliamentary elections are starting to materialise," he said.
    Romania's January-August trade deficit widened by just under
a third on the year, but the central bank said in the minutes of
its last meeting on Friday that it was not worried that the
economy was overheating. 
    The lower chamber of Poland's parliament will debate a bill
on the conversions on Monday. A 0.7 percent rise in Warsaw's
bluechip stock index indicated that worries over the
conversion costs to banks have subsided.
    Zagreb's stock index also rose by 0.7 percent as
Croatia's president is expected to nominate leader Andrej
Plenkovic as prime minister after tough coalition talks. 
    Zagreb is the best-performing bourse in the region along
with Budapest this year, with 18.7 percent gain since 2015.
    Elsewhere, the crown's euro exchange rate,
implied in 6-month forwards, was steady after the Czechs
reported 0.5 percent annual inflation for September, a tad below
analysts' forecast.
    Czech central bankers reiterated that the bank would not
drop its cap on the crown at 27 against the euro before the
second quarter of 2017. 
    The forint retreated from Friday's 17-month highs
in a move caused by profit-taking rather than worries due to
protests over the closure of Hungary's leading leftist
opposition newspaper. 
    "Not good news, but not enough to derail trends," one dealer
said.  
    
           CEE      SNAP   AT  1014       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.0
 crown     =>        200   190   00%    8%
 Hungary   <EURHUF  304.  304.   +0.  3.37
 forint    =>       3800  3800   00%     %
 Polish    <EURPLN  4.28  4.28   +0.  -0.5
 zloty     =>         07    30   05%    3%
 Romanian  <EURRON  4.51  4.51  -0.1  0.00
 leu       =>         90    12    7%     %
 Croatian  <EURHRK  7.50  7.50   +0.  1.77
 kuna      =>         60    65   01%     %
 Serbian   <EURRSD  123.  123.   +0.  -1.2
 dinar     =>       0600  1700   09%    9%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             885.  885.   +0.  -7.3
                      94    72   02%    6%
 Budapest           2844  2843   +0.   +18
                    6.33  8.95   03%  .92%
 Warsaw    <.WIG20  1763  1751   +0.  -5.1
           >         .21   .72   66%    6%
 Buchares           6942  6943  -0.0  -0.8
 t                   .88   .45    1%    8%
 Ljubljan  <.SBITO  736.  737.  -0.1   +5.
 a         P>         16    38    7%   75%
 Zagreb    <.CRBEX  2006  1992   +0.   +18
           >         .15   .03   71%  .73%
 Belgrade  <.BELEX  635.  639.  -0.6  -1.2
           15>        85    91    3%    8%
 Sofia     <.SOFIX  510.  507.   +0.   +10
           >          40    51   57%  .74%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.5  -0.0   +00  -1bp
           RR>        73    07  9bps     s
   5-year  <CZ5YT=  -0.1  -0.0   +03   +0b
           RR>         6    02  3bps    ps
           <CZ10YT  0.30     0   +02   +1b
 10-year   =RR>        9        9bps    ps
 Poland                                   
   2-year  <PL2YT=  1.78  0.00   +24   +0b
           RR>         1     3  4bps    ps
   5-year  <PL5YT=  2.45  -0.0   +29  -1bp
           RR>         8    12  5bps     s
           <PL10YT  3.01  -0.0   +30  -2bp
 10-year   =RR>        9    25  0bps     s
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.28  0.25  0.22     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.76  0.74  0.74  0.87
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.72  1.71  1.71  1.71
           ><WIBOR           5        
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 
 (Reporting by Sandor Peto)

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