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CEE MARKETS-Leu stable as ruling party expected to propose new PM by Monday
June 22, 2017 / 8:31 AM / 6 months ago

CEE MARKETS-Leu stable as ruling party expected to propose new PM by Monday

    By Marton Dunai
    BUDAPEST, June 22 (Reuters) - The Romanian leu held steady
on Thursday despite the political uncertainty over who will
succeed ousted Prime Minister Sorin Grindeanu.
    Grindeanu fell in a no-confidence vote initiated by his own
party, which is controlled by political adversary Liviu Dragnea.
Dragnea is expected to come up with a new candidate by Monday,
when President Klaus Iohannis considers his choice.
    Centrist President Klaus Iohannis has said he will only
approve a candidate who has a clean criminal record - something
that prevents Dragnea, who has a conviction for vote rigging,
from taking the top job himself.
    "The leu will probably stick to this area of under 4.6 for a
while until markets see what is going on with the new
government," said one trader with a foreign bank in Bucharest.
    "But I don't think there are reasons for it to appreciate.
There is instability, unpredictability and (hasty) policies."
    Iohannis rejected Dragnea's candidate for prime minister in
December after his party won an election by a wide margin.

    "It can only be hoped that Dragnea will choose his candidate
wisely. Otherwise President Iohannis will once again be unable
to agree and a deepening of the crisis will be inevitable.
Against this background (the leu) will remain under depreciation
pressure against the euro," analysts at Commerzbank said in a
    All other currencies also moved in tight ranges on Thursday.
    In the Czech Republic, the crown could continue to
appreciate, albeit slower, despite a fresh message from several
rate-setters, including central bank Governor Jiri Rusnok, that
rate hikes may come later than expected.
    A strengthening Czech crown may lead to a slower rise of
interest rates, possibly pushing a move beyond the third quarter
projected in the central bank's latest economic outlook, Rusnok
was quoted as saying on Wednesday.
    "We view the change of guidance as the result of declining
inflation momentum around the region, and declining probability
of the ECB hiking rates anytime soon," Commerzbank said.
    "But such a change of guidance is likely to slow down the
pace of CZK appreciation from here - we forecast EUR-CZK to stay
stable at around 26.00 through end-2017."
    Stocks around the region fell moderately except in Budapest
 where majors OTP Bank and Richter
fuelled mild gains.
    French President Emmanuel Macron on Wednesday singled out
Hungary and Poland when he said EU states that spend the bloc's
finances but turn their backs on its principles should feel "the
full political consequences".
    Macron will meet leaders of the Visegrad Four nations of
Poland, Hungary, Slovakia and the Czech Republic at a summit of
the European Council on Thursday and Friday.  
               CEE MARKETS  SNAPSHO   AT  0947 CET         
                            Latest   Previo  Daily   Change
                            bid      close   change  in
 Czech crown                26.3000  26.286  -0.05%   2.69%
 Hungary                    309.660  309.44  -0.07%  -0.27%
 forint                           0      00          
 Polish zloty                4.2555  4.2539  -0.04%   3.49%
 Romanian leu                4.5930  4.5974   +0.10  -1.26%
 Croatian                    7.4150  7.4175   +0.03   1.89%
 kuna                                             %  
 Serbian                    121.660  121.74   +0.07   1.39%
 dinar                            0      00       %  
 Note: daily   calculated   previou  close   1800          
 change        from         s        at      CET     
                            Latest   Previo  Daily   Change
                                     close   change  in
 Prague                      992.40  994.97  -0.26%   +7.68
 Budapest                   36030.9  35945.   +0.24   +12.5
                                  6      23       %      9%
 Warsaw                     2304.31  2319.1  -0.64%   +18.3
                                          3              0%
 Bucharest                  8344.29  8374.5  -0.36%   +17.7
                                          1              7%
 Ljubljana                   793.77  788.96   +0.61   +10.6
                                                  %      2%
 Zagreb                     1856.47  1856.0   +0.02  -6.94%
                                          3       %  
 Belgrade                    702.58  704.04  -0.21%  -2.06%
 Sofia                       684.73  686.25  -0.22%   +16.7
                            Yield    Yield   Spread  Daily
                            (bid)    change  vs      change
                                             Bund    in
 Czech                                               spread
   2-year                     0.049   0.024   +069b   +4bps
   5-year                     0.024   0.044   +040b   +5bps
   10-year                    0.949       0   +070b   +2bps
   2-year                     1.936  -0.053   +257b   -4bps
   5-year                     2.608  -0.011   +299b   +0bps
   10-year                    3.186   0.006   +294b   +2bps
               FORWARD      RATE     AGREEMENT             
                            3x6      6x9     9x12    3M
 Czech Rep             <PR     0.34    0.41     0.5       0
 Hungary               <BU     0.19     0.2    0.23    0.15
 Poland                <WI     1.76    1.78    1.81    1.73
 Note: FRA     are for ask                                 
 quotes        prices                                
 (Reporting by Reuters bureaus; Editing by Alison Williams)

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