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CEE MARKETS-Currencies ease, Polish central bank holds fire
July 5, 2017 / 3:46 PM / 5 months ago

CEE MARKETS-Currencies ease, Polish central bank holds fire

    * Polish central bank holds fire, says CPI remains moderate
    * Polish cbank chief sees no rate hike until end-2008
    * Regional stocks rise ahead of Fed minutes
    * Romanian shares jump on hope tax reform will be watered up

 (Recasts with Polish central bank decision and comments, rise
in stock prices)
    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, July 5 (Reuters) - Central European
currencies mostly eased on Wednesday as the Polish central bank
kept interest rates on hold and its governor said a hike before
2019 was unlikely.
    The zloty, the forint and the leu
 weakened by 0.1-0.2 percent against the euro by 1451
GMT.
    Regional equities rose, however, tracking a rebound in
global share markets due to expectations that the minutes of the
Federal Reserve's last meeting later on Wednesday will not add
to recent hawkish signals from central banks in the world.
    Central banks in the European Union's eastern wing have
mostly remained dovish.
    The Hungarian central bank confirmed in the minutes of its
June meeting that it stood ready to ease monetary conditions if
needed, adding that inflation remained moderate.
    The Polish central bank echoed that after its meeting.
    Its new inflation and GDP forecasts showed little change and
its governor Adam Glapinski said the new projections only
strengthened his view that interest rates would not be changed
this year and next.
    Upcoming economic figures, if they show higher inflation
pressure, may trigger expectations for a shift to more hawkish
rhetoric and help support the zloty, analysts have said. 
    Erste analyst Katarzyna Rzentarzewska said inflation could
remain below the bank's target in the medium term.
    "The economy should continue to expand at robust pace,
however, is not enough to change the MPC's (central
bank's)stance," she said in a note.
    Glapinski himself did not rule out the possibility that the
bank may discuss rate changes before the end of 2018.
Rate-setter Eugeniusz Gatnar said it was a risk that negative
inflation-adjusted interest rates could hurt savings.
    In regional equities markets, Romanian shares led the rise,
with Bucharest's main index gaining more than 2.5
percent.
    The index touched a 4-1/2-month low on Tuesday as investors
fretted about Romania's proposal to overhaul its corporate tax
system and shift to a progressive tax on a company's turnover,
replacing its flat 16 percent corporate tax rate.
    But on Wednesday the market drew relief from speculation in
the Romanian media that the reform would be watered down in the
planning process.
    The ruling leftists' fiscal plans have kept Romanian markets
on edge this year, fuelling worries that the budget deficit and
inflation could rise.
    Romanian central bank Governor Mugur Isarescu told a banking
seminar on Tuesday that policymakers would not start hiking
interest rates before inflation rebounded, but that higher price
growth was inevitable.    
                CEE MARKETS  SNAPSH   AT  1651 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.105  26.131   +0.10   3.46%
                                  0       0       %  
 Hungary                     308.60  308.04  -0.18%   0.07%
 forint                          00      00          
 Polish zloty                4.2460  4.2405  -0.13%   3.72%
 Romanian leu                4.5905  4.5845  -0.13%  -1.21%
 Croatian kuna               7.4110  7.4105  -0.01%   1.94%
 Serbian dinar               120.31  120.82   +0.42   2.53%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Budapest                    35224.  34889.   +0.96   +10.0
                                 85      56       %      7%
 Warsaw                      2302.0  2294.2   +0.34   +18.1
                                  4       7       %      8%
 Bucharest                   8142.9  7928.6   +2.70   +14.9
                                  3       7       %      3%
 Ljubljana                   796.29  792.85   +0.43   +10.9
                                                  %      7%
 Zagreb                      1878.5  1866.8   +0.63  -5.83%
                                  0       2       %  
 Belgrade                    713.88  713.05   +0.12  -0.49%
                                                  %  
 Sofia                       711.42  711.44   +0.00   +21.3
                                                  %      1%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Poland                                                    
   2-year                    #VALUE  -0.159  #VALUE  -16bps
                               !               !     
   5-year                    #VALUE   0.034  #VALUE   +4bps
                               !               !     
   10-year                   #VALUE    0.03  #VALUE   +3bps
                               !               !     
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Hungary                <BU     0.2    0.23     0.3    0.15
                BOR=>                                
 Poland                 <WI    1.75    1.77   1.825    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
     

 (Additional reporting by Luiza Ilie and Radu Marinas in
Bucharest; Editing by Gareth Jones)
  
 
 

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