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CEE MARKETS-Currencies ease after Fed, Czech central bank seen holding fire
May 4, 2017 / 9:53 AM / 5 months ago

CEE MARKETS-Currencies ease after Fed, Czech central bank seen holding fire

    * Currencies ease, bonds mixed on hawkish Fed, reaction is
muted
    * Czech central bank seen keeping rates on hold
    * Zloty off 20-month high but Polish stocks hit 23-month
high
    * Kuna steady though snap elections are possible in Croatia

    By Sandor Peto
    BUDAPEST, May 4 (Reuters) - Central European currencies
eased slightly on Thursday after hawkish comments from the
Federal Reserve and ahead of a likely decision by the Czech
central bank to keep interest rates on hold.
    Central banks in the European Union's eastern wing have
shown no signs that a rebound in inflation since late 2016 could
prompt them to start reversing years of interest rate loosening
any time soon.
    The Czech central bank (CNB), however, four weeks ago
removed its cap which had kept the crown weaker than
27 against the euro.
    That could lift the crown by some 4 percent in the coming
year according to a Reuters poll, but speculative crown buying
positions worth tens of billions of euros built in the past
months may keep it volatile in the short term.
    The crown eased a shade to 26.78 against the euro by 0832
GMT, retreating from two-week highs touched on Wednesday.
    The Czech coalition government collapsed on Tuesday, but
investors continued to ignore politics in the Czech Republic
which is regarded as the region's safe-haven market.

    Czech 10-year government bond yields have fallen since
Friday when JPMorgan added Czech papers to its GBI-EM index.
    Raiffeisen analyst Gintaras Shlizhyus said in a note that
this added weight to their "hypothesis of likely more support
for CZK developing". 
    "The government resignation failed to impress financial
markets so any volatility from politics (is) unlikely to feed
into FX market at this stage," Shlizhyus added.  
    The kuna was steady at 7.4475 even though the
Croatian parliament started to discuss a no-confidence motion
against the finance minister on Wednesday that could force a
snap election.
    The zloty shed 0.4 percent to 4.2157 against the
euro, but dealers said that was a natural correction after a
jump to 20-month highs on Wednesday in illiquid international
markets, when local exchanges were closed due to a national
holiday.
    The overall sentiment, however, remained positive, indicated
by a 1 percent rise in Warsaw's main equities index to
a 23-month high, extending its gains so far this year to 24
percent.
    Bank and energy stocks lifted the index even though
heavyweight copper producer KGHM's stocks shed 3
percent, with London copper prices stumbling.
    Major banks in the region -- Czech Komercni and
Romanian BRD -- reported a jump in their
first-quarter earnings.  
    The leu was steady, but it stays near one-month
lows at 4.545 against the euro as investors remain worried over
a proposal to widen a draft bill on prison pardons to include
corruption offences.
          
              CEE        SNAPS   AT  1032          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.78  26.77  -0.02  0.85%
                            00     55      %  
 Hungary                 312.3  311.9  -0.11  -1.11
 forint                    000    500      %      %
 Polish                  4.215  4.200  -0.36  4.46%
 zloty                       7      7      %  
 Romanian                4.545  4.547   +0.0  -0.22
 leu                         0      4     5%      %
 Croatian                7.447  7.451   +0.0  1.44%
 kuna                        5      5     5%  
 Serbian                 123.0  123.1   +0.1  0.28%
 dinar                     000    950     6%  
 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                  1002.  996.2   +0.6   +8.7
                            52      9     3%     8%
 Budapest                32263  32077   +0.5   +0.8
                           .36    .72     8%     1%
 Warsaw                  2414.  2392.   +0.9   +23.
                            80     09     5%    97%
 Bucharest               8244.  8209.   +0.4   +16.
                            37     88     2%    36%
 Ljubljana               774.6  777.6  -0.38   +7.9
                             4      1      %     5%
 Zagreb                  1892.  1890.   +0.1  -5.13
                            47     16     2%      %
 Belgrade     <.BELEX15  714.8  719.9  -0.71  -0.35
              >              5      7      %      %
 Sofia                   668.8  664.7   +0.6   +14.
                             9      1     3%    06%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.09  0.086   +063   +8bp
              >              1           bps      s
   5-year     <CZ5YT=RR  0.045  0.002   +039  -2bps
              >                          bps  
   10-year    <CZ10YT=R  0.818  -0.00   +045  -4bps
              R>                    4    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.018  0.014   +274   +1bp
              >                          bps      s
   5-year     <PL5YT=RR   2.92  0.041   +327   +2bp
              >                          bps      s
   10-year    <PL10YT=R  3.495  0.033   +313   +0bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.34   0.41    0.5      0
              PRIBOR=>                        
 Hungary              <   0.25   0.35   0.46   0.16
              BUBOR=>                         
 Poland               <  1.751   1.78  1.829   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Luiza Ilie in Bucharest and Bartosz
Chmielewski in Warsaw; Editing by Toby Davis)
  
 
 

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