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CEE MARKETS-Crowns leads easing, Hungarian, Romanian CPI below forecasts
April 11, 2017 / 9:01 AM / 5 months ago

CEE MARKETS-Crowns leads easing, Hungarian, Romanian CPI below forecasts

    * Hungary, Romania release lower-than-expected inflation
figures
    * Risk aversion in global markets weighs on CEE currencies
    * Czech crown stays on roller-coaster, retreats after surge
    * Dinar firms, Serbian central bank expected to hold fire

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, April 11 (Reuters) - Central European
currencies mostly eased on Tuesday as investors shunned risky
assets due to rising geopolitical risks, while Hungary and
Romania published lower-than-expected inflation figures.
    The Czech crown led the decline, shedding 0.3
percent to trade at 26.685 against the euro at 0820 GMT.
    Its volatility has jumped since the central bank (CNB) on
Thursday abandoned its cap, which had kept it weaker than 27
versus the euro since 2013.
    A steadily growing economy is expected to support the
currency, while the long crown positions built by investors in
speculation for the exit from the cap, worth tens of billions of
euros,  make it vulnerable.
    "Given the high speculative capital still in the Czech FX
market we should continue to see these short-term setbacks, thus
leaving us with overall strong volatility in the Czech koruna
over the coming months," Raiffeisen said in a note.
    The crown got a temporary boost from higher-than-expected
March inflation figures on Monday.
    Hungary's 2.7 percent and Romania's 0.2 percent annual
inflation figures were below forecasts on Tuesday, just like
Polish data reported early this month.
    Analysts said the Hungarian figure underpinned expectations 
that the central bank would maintain its loose policy.
    "The weakening (of the forint and Poland's zloty), however,
started weeks ago and is related to the dollar's advance
(against the euro)," said Budapest-based Raiffeisen analyst
Zoltan Torok.
    The forint briefly touched a four-week-low after
the data. The zloty and the leu also eased a
shade before the currencies regained ground, tracking the euro's
 rebound versus the dollar.
    In Romania inflation remains low, but a bill, which the
government plans to submit to parliament next week to further
boost public sector wages, adds to risks of an inflation jump by
next year.
    The central bank's fear of unwanted hot money inflows may 
mean that it could start to lift interest rates only next year,
ING's chief economist in Romania, Ciprian Dascalu said in a
note.
    As the first step of policy normalisation, in July the bank
could start to narrow its standing facility corridor of
plus/minus 150 basis points around its main rate to Poland's
plus/minus 100 basis point level, Dascalu said.
    "We believe that the risk balance to the inflation outlook
are upwardly tilted," he added.
    Elsewhere, the dinar firmed 0.1 percent against
the euro ahead of the Serbian central bank's meeting where it is
expected to keep interest rates on hold.
    
              CEE        SNAPS   AT  1020          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.68  26.60  -0.31  1.21%
                            50     35      %  
 Hungary                 311.3  311.2  -0.03  -0.82
 forint                    600    750      %      %
 Polish                  4.240  4.238  -0.05  3.84%
 zloty                       9      9      %  
 Romanian                4.513  4.513   +0.0  0.49%
 leu                         0      0     0%  
 Croatian                7.423  7.435   +0.1  1.78%
 kuna                        0      5     7%  
 Serbian                 123.6  123.7   +0.1  -0.26
 dinar                     700    950     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                  992.9  988.8   +0.4   +7.7
                             9      3     2%     5%
 Budapest                32551  32468   +0.2   +1.7
                           .39    .30     6%     1%
 Warsaw                  2248.  2244.   +0.2   +15.
                            70     02     1%    44%
 Bucharest               8223.  8214.   +0.1   +16.
                            38     81     0%    07%
 Ljubljana               780.6  782.1  -0.19   +8.7
                             9      7      %     9%
 Zagreb                  1962.  1966.  -0.23  -1.64
                            10     70      %      %
 Belgrade     <.BELEX15  731.7  725.8   +0.8   +2.0
              >              9      8     1%     1%
 Sofia                   653.7  654.2  -0.07   +11.
                             5      4      %    48%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.00  -0.03   +084  -2bps
              >              9      1    bps  
   5-year     <CZ5YT=RR  0.284  0.008   +079   +2bp
              >                          bps      s
   10-year    <CZ10YT=R   1.02  -0.02   +081  -2bps
              R>                    7    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.017  -0.04   +286  -4bps
              >                     9    bps  
   5-year     <PL5YT=RR  2.905  -0.00   +341   +0bp
              >                     6    bps      s
   10-year    <PL10YT=R   3.47  -0.01   +326  -1bps
              R>                    7    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.31   0.34   0.44      0
              PRIBOR=>                        
 Hungary              <   0.21   0.26   0.34   0.16
              BUBOR=>                         
 Poland               <  1.751  1.768  1.806   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Jason Hovet in Prague; Editing by
Keith Weir)
  
 
 

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