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CEE MARKETS-Currencies trade near multi-month lows, Romania scraps auctions
March 13, 2017 / 2:53 PM / 8 months ago

CEE MARKETS-Currencies trade near multi-month lows, Romania scraps auctions

    * Zloty touches 7-week low, leu near 9-month low
    * Polish central bank sees CPI below target until 2019
    * Romanian wages surge, concern over deficit
    * Romania rejects all bids at government bond auction

 (Adds Romania's failed bond auction, rise of Polish stocks)
    By Sandor Peto
    BUDAPEST, March 13 (Reuters) - Central Europe's main
currencies traded near multi-month lows on Monday after monetary
policy expectations turned more hawkish both in the United
States and the euro zone last week.
    That contrasts with the loose monetary policy outlook in
some of the region's main economies.
    Friday's strong U.S. jobs data underpinned expectations for
a Fed interest rate hike this week and investors are betting on
a euro zone hike early next year.
    Concerns that "local central banks, especially in Hungary,
Poland and Romania, would underestimate reflation risks may keep
the reflation trade in many CEE countries in vogue," Raiffeisen
analyst Stephan Imre said in a note, referring to a trade that
involves selling CEE currencies and buying the euro. 
    The Polish central bank said inflation could stay below its
target of 2.5 percent until 2019.
    It also said the zloty was significantly weaker
than suggested by its fundamentals and cited the prospect of
above-3 percent economic growth in coming years.
    But the zloty touched a 7-week low against the euro. Trading
at 4.3405 at 1410 GMT, it was 0.1 percent lower than on Friday.
    "In our base case we assume that the Fed will not scare
markets and that the zloty may return to a consolidation range
of 4.26-4.32 vs euro in the next few weeks," said Bank Pekao
economist Arkadiusz Urbanski.
    While currencies eased, investors were picking some assets
in regional markets.
    Warsaw's stock index, an underperformer last year,
rose 1.6 percent. With 15 percent gain since 2016 it is the
region's best performer this year.
    The zloty has outperformed the forint and the leu
 this year. The forint traded near the 3-month lows set
on Friday.
    The leu touched a new 9-month low.
    It traded 0.2 percent down from Friday's close, at 4.5560,
after January figures showed Romania's monthly trade deficit
doubled, while net average wages surged 18.4 percent in annual
terms, boosted by public sector increases.
    Investors' concern is that Romania's budget deficit may
exceed 3 percent of economic output, the European Union's
threshold, and that political tension over corruption may rise.
    An auction of 7-year Romanian bonds failed to attract
sufficient demand and the finance ministry rejected all bids,
the third failed tender this year over fiscal uncertainty.

    Hungary's and Poland's bonds, meanwhile, firmed slightly in
longer maturities, with yield dropping 2-3 basis points.
    Their respective 10-year papers traded at 3.61 and 3.71
percent, still well above Spain's 1.86 percent and 2.588 percent
in the U.S.
    
              CEE        SNAPS   AT  1510          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            00     45     2%      %
 Hungary                 312.6  312.7   +0.0  -1.23
 forint                    500    850     4%      %
 Polish                  4.340  4.334  -0.14  1.46%
 zloty                       5      4      %  
 Romanian                4.556  4.547  -0.19  -0.46
 leu                         0      3      %      %
 Croatian                7.428  7.419  -0.11  1.71%
 kuna                        0      5      %  
 Serbian                 123.8  123.7  -0.06  -0.40
 dinar                     500    800      %      %
 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                  981.2  972.3   +0.9   +6.4
                             3      1     2%     7%
 Budapest                32562  32727  -0.50   +1.7
                           .35    .24      %     5%
 Warsaw                  2234.  2200.   +1.5   +14.
                            87     03     8%    73%
 Bucharest               7907.  7894.   +0.1   +11.
                            25     09     7%    60%
 Ljubljana               793.5  793.3   +0.0   +10.
                             2      7     2%    58%
 Zagreb                  2228.  2225.   +0.1   +11.
                            58     09     6%    72%
 Belgrade     <.BELEX15  740.5  739.7   +0.1   +3.2
              >              4      2     1%     3%
 Sofia                   620.0  624.9  -0.78   +5.7
                             1      1      %     3%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.60   0.01   +021   +1bp
              >              1           bps      s
   5-year     <CZ5YT=RR  0.055  0.062   +038   +9bp
              >                          bps      s
   10-year    <CZ10YT=R  0.792  0.116   +033   +15b
              R>                         bps     ps
 Poland                                            
   2-year     <PL2YT=RR  2.112  -0.01   +293  -1bps
              >                     7    bps  
   5-year     <PL5YT=RR  3.079  -0.01   +340   +1bp
              >                     7    bps      s
   10-year    <PL10YT=R  3.724  -0.02   +326   +0bp
              R>                    8    bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <    0.3   0.36   0.45      0
              PRIBOR=>                        
 Hungary              <   0.32   0.44   0.63   0.23
              BUBOR=>                         
 Poland               <   1.77   1.78  1.845   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
     

 (Additional reporting by Luiza Ilie in Bucharest and Marcin
Goettig and Lidia Kelly in Warsaw; Editing by Mark Potter and
Pritha Sarkar)
  
 
 

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