June 21, 2017 / 8:20 AM / 2 months ago

CEE MARKETS-Leu hovers near 4-1/2-year lows as PM faces no-confidence vote

    BUDAPEST, June 21 (Reuters) - The Romanian leu
hovered near 4-1/2-year lows as Prime Minister Sorin Grindeanu
faced a no-confidence vote in parliament on Wednesday.
    His Social Democrat Party (PSD) and a coalition partner
withdrew support for Grindeanu a week ago saying he had failed
to roll out their governing programme, leaving his fate in the
balance.
    At 0749 GMT, the leu was 0.1 percent stronger on the day,
broadly in line with gains among other currencies in the region.
However, the unit has been the worst performer in central
Europe, down 1.2 percent since the start of the year.
    "This political turmoil coincides with economic upheaval.
While, at the start of the year, the country reported the
highest growth rates among Eastern European countries amid very
low inflation rates, this momentum is essentially based on
thrifty fiscal policy," analysts at Commerzbank said in a note.
    "The elevated political uncertainty is weighing on the RON.
The managed currency recently traded at just under 4.60 EUR-RON
and has thus not been so weak since 2012. The political
situation should keep the RON under pressure initially."
    The forint was a touch stronger in early trade,
pulling back from a one-month-low caused by Tuesday's decision
by the National Bank of Hungary (NBH) to push more funds than
expected from its three-month deposits into the economy to help
cut borrowing costs.
    The NBH, seen as the most dovish central bank in central
Europe, also lowered its inflation forecasts for the next two
years and affirmed its readiness to ease monetary conditions
further if below-target inflation persists.
    "This supports our call of limited HUF appreciation
potential going forward as the (NBH) will remain reluctant to
end its expansionary monetary policy," analysts at Raiffeisen
Bank said in a note.
    "We would expect to see HUF underperforming its peers PLN
(Polish zloty) and CZK (Czech crown) over the coming months as
their central banks are expected to tighten monetary policy
earlier."
    Before Tuesday's policy meeting, analysts polled by Reuters
had forecast the Hungarian base rate staying unchanged at least
until the second quarter of 2019.
    Czech central bank Governor Jiri Rusnok was quoted as saying
on Wednesday that the strength of the crown, trading on the
strong side of its former cap on its value at 27 to the euro,
could be a reason for a slower rise in interest rates.

    A currency dealer said the crown was likely to stay in a
range between 26.150-26.450 in the coming days.
    
               CEE MARKETS  SNAPSH   AT  0949 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.325  26.339   +0.05   2.59%
                                 0       0       %  
 Hungary                    308.87  309.16   +0.10  -0.02%
 forint                         00      50       %  
 Polish zloty               4.2365  4.2445   +0.19   3.95%
                                                 %  
 Romanian leu               4.5925  4.5975   +0.11  -1.25%
                                                 %  
 Croatian                   7.4140  7.4195   +0.07   1.90%
 kuna                                            %  
 Serbian                    121.56  121.79   +0.19   1.47%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     994.40  998.21  -0.38%   +7.90
                                                         %
 Budapest                   35762.  35989.  -0.63%   +11.7
                                50      69              5%
 Warsaw                     2284.3  2302.8  -0.80%   +17.2
                                 1       3              7%
 Bucharest                  8353.7  8376.5  -0.27%   +17.9
                                 0       0              1%
 Ljubljana                  785.63  790.35  -0.60%   +9.48
                                                         %
 Zagreb                     1856.8  1856.0   +0.05  -6.92%
                                 7       3       %  
 Belgrade                   706.16  703.95   +0.31  -1.56%
                                                 %  
 Sofia                      686.32  687.32  -0.15%   +17.0
                                                        3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.005  -0.044   +065b   -3bps
                                                ps  
   5-year                   -0.001   0.041   +041b   +5bps
                                                ps  
   10-year                   0.952   0.057   +070b   +7bps
                                                ps  
 Poland                                                   
   2-year                    1.931  -0.084   +258b   -7bps
                                                ps  
   5-year                    2.591  -0.011   +300b   +0bps
                                                ps  
   10-year                   3.155  -0.013   +291b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.34    0.42     0.5       0
               IBOR=>                               
 Hungary               <BU    0.19    0.22    0.26    0.15
               BOR=>                                
 Poland                <WI    1.77   1.765    1.81    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Luiza Ilie and Gergely Szakacs; Editing by Andrew
Heavens)
  
 
 

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