* Dollar rebound, profit-taking, politics weaken currencies
* Romanian leu at 4-yr low amid fresh political uncertainty
* Markets shrug off Czech PM giving up party leadership
* Asset price losses moderate, local economies still strong
By Sandor Peto
BUDAPEST, June 15 Central European currencies
eased on Thursday due to a combination of risk aversion,
profit-taking and political turbulence in Bucharest and Prague.
In global markets, the U.S. Federal Reserve's interest rate
hike and guidance for more to come helped the dollar rebound
following a drop prompted by an unexpected slowing of U.S.
inflation and retail sales in May.
Dollar buying often weakens currencies in emerging markets,
including the European Union's eastern members.
"This is the classical correlation now... but it is not a
big weakening (in Central European exchange rates)," one
Budapest-based fixed income trader said.
The zloty and the Czech crown are still
near multi-year highs and the forint near the 8-month
highs that they reached in recent weeks, supported by robust
growth and stability in the region's main economies.
On Thursday the forint and the zloty,
weakened by 0.3 percent against the euro by 0847 GMT, with the
Polish currency retreating behind the 4.2 line. Polish domestic
markets are closed due to a national holiday.
The region's main stock indices eased by 0.4-0.5 percent,
tracking Western European peers as the U.S. data triggered some
concerns over global economic growth.
Long-term Hungarian government bond yields were lower by a
few basis points from Wednesday's fixing, with 10-year paper
trading at around 2.92 percent.
"The 10-year U.S. yield is also near (7-month) lows, despite
the hawkish Fed... and while they stay low, our yields will be
kept down too," said Gergely Urmossy, analyst of Erste in
The crown and the leu shed 0.1 percent
against the euro.
The crown, trading at 26.18, is still near its strongest
levels since 2013, buoyed by a robust economy and expectations
for central bank rate hikes later this year or next.
Investors in the Czech Republic usually shrug off domestic
political news, like Prime Minister Bohuslav Sobotka's
announcement on Wednesday that he would step down as the leader
of his Social Democrat party.
Romania's ruling Social Democrats, meanwhile, withdrew their
support from their own government late on Wednesday, leading to
President Klaus Iohannis urged the ruling party to resolve
the crisis with a no-confidence vote in parliament if Prime
Minister Sorin Grindeanu is unwilling to resign.
The leu's reaction was muted, declining just 0.2 percent to
4.589, though this represented a new four-year low for a
currency that was underperforming the region even before the
latest political turmoil.
The currency has been under pressure over concerns that the
leftist government's wage hikes and tax cuts could boost the
budget deficit and stoke inflation by next year.
CEE MARKETS SNAPSH AT 1047 CET
Latest Previo Daily Change
bid close change in
Czech crown 26.180 26.147 -0.13% 3.16%
Hungary 306.73 305.67 -0.34% 0.68%
forint 00 50
Polish zloty 4.2035 4.1929 -0.25% 4.77%
Romanian leu 4.5873 4.5808 -0.14% -1.14%
Croatian kuna 7.3980 7.4005 +0.03 2.12%
Serbian dinar 122.12 122.15 +0.02 1.01%
00 00 %
Note: daily calculated previo close 1800
change from us at CET
Latest Previo Daily Change
close change in
Prague 1000.3 1000.1 +0.01 +8.54
0 5 % %
Budapest 35853. 35985. -0.37% +12.0
61 82 3%
Bucharest 8440.1 8477.1 -0.44% +19.1
0 2 3%
Ljubljana 784.92 788.60 -0.47% +9.38
Zagreb 1855.8 1854.5 +0.07 -6.97%
4 9 %
Belgrade 719.06 719.91 -0.12% +0.24
Sofia 678.87 681.81 -0.43% +15.7
Yield Yield Spread Daily
(bid) change vs change
2-year -0.091 -0.043 +057b -7bps
5-year -0.069 0.027 +035b -1bps
10-year 0.86 0.077 +061b +6bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech Rep <PR 0.32 0.39 0.47 0
Hungary <BU 0.36 0.22 0.28 0.15
Note: FRA are for ask
(Reporting by Sandor Peto; Editing by Gareth Jones)