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CEE MARKETS-Crown retreats on rate setter comment, Polish shares drop
June 14, 2017 / 1:47 PM / 5 months ago

CEE MARKETS-Crown retreats on rate setter comment, Polish shares drop

    * Dovish Czech rate setter Tomsik says no hurry for rate
hike
    * Czech crown retreats from strongest level for years
    * Czech PM's party helm, Romanian PM's job are at risk
    * Investors watch Fed guidance rather than local politics

 (Adds Czech auction result, fall of Polish shares)
    By Sandor Peto and Jason Hovet
    BUDAPEST/PRAGUE, June 14 (Reuters) - The Czech crown
retreated from multi-year highs on Wednesday after Czech central
bank Vice-Governor Vladimir Tomsik said its strength allows the
CNB not to rush into rate hikes.
    Central European assets were mostly rangebound as investors
awaited a meeting of the Federal Reserve.
    The crown shed less than 0.1 percent against the
euro by 1307 GMT. But trading at 26.149, it was drifting away
from overnight highs at 26.13, its strongest level since the CNB
in April removed a cap of 27 on the currency, and also since
late 2013 when the cap was introduced.
    The crown's strengthening, partly fuelled by expectations of
a rebound in inflation and CNB rate hikes, received fresh
impetus on Tuesday through "buy" recommendations from banks
including Citigroup.
    But Tomsik, regarded as a dovish rate setter, was quoted by
the newspaper Hospodarske Noviny as saying the crown had got
stronger since the bank's latest outlook, which indicated rates
rising in the second half of 2017.
    "(This) means that we do not need to hurry quickly with
raising rates," he said.
    Even a delay to the fourth quarter from the third would
retain a gap with markets, which have priced in a hike only for
the second quarter of 2018, Komercni Banka trader Dalimil
Vyskovski said.
    He added that Tomsik's comments were "somewhat surprising.
    "Market rates now (are) increasingly in a 'conundrum' mode."
    An auction of Czech government bonds drew decent demand for
long-dated papers, but little appetite for the zero-coupon
2022-expiry bond.
    Investors in the region seek cues from the U.S. Federal
Reserve's guidance over its rate hike cycle.
    The Fed is likely to go ahead with another 25-basis-point
rate increase on Wednesday, the fourth hike of a rate increase
cycle that started in December 2015.
    The zloty eased to 4.1945 against the euro.
    "The tone of the Fed... may create pressure for Polish IRS
rates and bond yields to rise, and the holiday in Poland
tomorrow may strengthen this reaction," BZ BWK analysts said in
a note.
    Warsaw's main equities index dropped slightly,
driven by a fall of the shares of Pekao bank and
state-run insurer PZU, after PKO's supervisory board
dismissed its long-serving, respected Chief Executive Officer
Luigi Lovaglio.
    PZU and state-controlled fund PFR completed Pekao's takeover
from Italian UniCredit last month.
    Elsewhere, Budapest's main index hit another record
high, briefly piercing the 36,000-point psychological level.
    
                CEE MARKETS  SNAPSH   AT  1507 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.149  26.141  -0.03%   3.28%
                                  0       0          
 Hungary                     306.06  306.23   +0.06   0.90%
 forint                          00      50       %  
 Polish zloty                4.1925  4.1933   +0.02   5.04%
                                                  %  
 Romanian leu                4.5672  4.5655  -0.04%  -0.71%
 Croatian kuna               7.4000  7.4105   +0.14   2.10%
                                                  %  
 Serbian dinar               122.08  122.30   +0.18   1.04%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1001.6  1001.3   +0.03   +8.68
                                  3       0       %       %
 Budapest                    35929.  35588.   +0.96   +12.2
                                 87      70       %      7%
 Warsaw                      2298.8  2302.4  -0.16%   +18.0
                                  1       1              1%
 Bucharest                   8468.7  8446.2   +0.27   +19.5
                                  2       3       %      3%
 Ljubljana                   788.60  797.46  -1.11%   +9.90
                                                          %
 Zagreb                      1856.4  1854.5   +0.10  -6.94%
                                  5       9       %  
 Belgrade                    719.91  719.93   +0.00   +0.35
                                                  %       %
 Sofia                       680.85  681.05  -0.03%   +16.1
                                                         0%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                    -0.048       0   +063b   -2bps
                                                 ps  
   5-year                    -0.096  -0.022   +035b   -1bps
                                                 ps  
   10-year                    0.856   0.074   +062b   +10bp
                                                 ps       s
 Poland                                                    
   2-year                     1.914   0.075   +259b   +5bps
                                                 ps  
   5-year                     2.566  -0.033   +301b   -2bps
                                                 ps  
   10-year                    3.129  -0.038   +289b   -1bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.34    0.41    0.49       0
                IBOR=>                               
 Hungary                <BU    0.36    0.23   0.275    0.15
                BOR=>                                
 Poland                 <WI   1.753  1.7625  1.7975    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
 (Additional reporting by Marcin Goettig and Marcin Goclowski in
Warsaw, Luiza Ilie in Bucharest editing by Mark Heinrich)
  
 
 

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