April 11, 2017 / 1:56 PM / 8 months ago

CEE MARKETS-Crown leads FX easing, inflation rates below forecasts

    * Hungary, Romania with lower-than-expected inflation
    * Risk aversion in global markets weighs on CEE currencies
    * Czech crown stays on roller-coaster, retreats after surge
    * Czech c.banker says crown less volatile than expected
    * Dinar firms, Serbian central bank expected to hold fire

 (Recasts with Czech, Polish central banker comments, Serbian
interest rate decision)
    By Sandor Peto and Robert Muller
    BUDAPEST/PRAGUE, April 11 (Reuters) - Central Europe's main
currencies eased on Tuesday as investors shunned risky assets
due to rising geopolitical risks and after lower-than-expected
inflation figures from the region.
    The Czech crown led the decline, shedding 0.2
percent to trade at 26.666 against the euro at 1251 GMT, while
the forint and the zloty eased 0.1 percent.
    The crown's 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.
    Investors built tens of billions of euros worth of long
crown positions since last year, betting on a surge of the Czech
unit once its cap was removed.
    CNB Governor Jiri Rusnok was quoted by the newspaper Pravo
on Tuesday as saying it could take up to two months for the
crown to find a stable level.
    He also said in an interview to the news website
www.idnes.cz that "the amount of crowns, which the market
players bought, is enormous".
    He said the crown's volatility after the exit from the cap
was much lower than the bank had expected.
    The crown has roller-coastered between 27.25 and 26.5
against the euro since the exit.
    One-month volatilities of the region's currencies against
the dollar have jumped in the region anyway since last Wednesday
due to geopolitical uncertainties, including the risk of a
far-right win in France's presidential elections.
    Lower-than-expected inflation figures released in the region
may have contributed to the weakness of currencies. 
    Monday's 2.6 percent Czech annual inflation figure was
higher than expected and briefly lifted the crown.
    But Hungary's 2.7 percent and Romania's 0.2 percent figure,
both released on Tuesday, were lower than forecast, while Poland
confirmed its own lower-than-projected 2 percent figure.
    The Hungarian data underpin the view that the central bank
will keep its policy loose.
    The Polish central bank could keep rates at all-time lows
until at least the end of the first quarter of 2018 if inflation
stabilises below 2 percent in coming quarters, rate-setter Rafal
Sura said.
    "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.      
    Elsewhere, the dinar gained 0.1 percent after
Serbia's central bank kept its 4 percent key rate, the highest
in the region, on hold as expected. 
    The kuna also continued its rebound from 2-month
lows as troubled food and retail group Agrokor said last week
that it was handing control to the state. 
     
              CEE        SNAPS   AT  1451          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.66  26.60  -0.23  1.28%
                            60     35      %  
 Hungary                 311.7  311.2  -0.14  -0.92
 forint                    000    750      %      %
 Polish                  4.243  4.238  -0.10  3.79%
 zloty                       0      9      %  
 Romanian                4.511  4.513   +0.0  0.53%
 leu                         1      0     4%  
 Croatian                7.419  7.435   +0.2  1.83%
 kuna                        0      5     2%  
 Serbian                 123.6  123.7   +0.1  -0.23
 dinar                     400    950     3%      %
 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                  994.9  988.8   +0.6   +7.9
                             0      3     1%     5%
 Budapest                32424  32468  -0.13   +1.3
                           .60    .30      %     2%
 Warsaw                  2250.  2244.   +0.2   +15.
                            16     02     7%    52%
 Bucharest               8208.  8214.  -0.07   +15.
                            98     81      %    86%
 Ljubljana               781.1  782.1  -0.13   +8.8
                             5      7      %     6%
 Zagreb                  1936.  1966.  -1.54  -2.93
                            41     70      %      %
 Belgrade     <.BELEX15  734.0  725.8   +1.1   +2.3
              >              0      8     2%     2%
 Sofia                   654.3  654.2   +0.0   +11.
                             1      4     1%    58%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.04  -0.06   +079  -6bps
              >              4      6    bps  
   5-year     <CZ5YT=RR  0.315  0.039   +081   +4bp
              >                          bps      s
   10-year    <CZ10YT=R   1.02  -0.02   +080  -3bps
              R>                    7    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.017  -0.04   +285  -5bps
              >                     9    bps  
   5-year     <PL5YT=RR  2.898  -0.03   +340  -3bps
              >                          bps  
   10-year    <PL10YT=R  3.467  -0.02   +325  -3bps
              R>                    7    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <    0.3   0.34   0.44      0
              PRIBOR=>                        
 Hungary              <    0.2   0.26   0.34   0.16
              BUBOR=>                         
 Poland               <  1.751  1.773   1.81   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 

 (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague and Bartosz Chmielewski in Warsaw,; Editing by Tom
Heneghan)
  
 
 

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