June 25, 2020 / 8:44 AM / 2 months ago

CEE MARKETS-Forint keeps falling after surprise rate cut

    By Alan Charlish
    WARSAW, June 25 (Reuters) - The Hugarian forint
was central Europe's worst performing currency in Thursday
morning trade, weighed down by an unexpected rate cut earlier in
the week as markets digested news of a surging number of
coronavirus cases globally.
    The National Bank of Hungary unexpectedly cut its base rate
 by 15 basis points to 0.75% on Tuesday, following 
rate cuts in Poland, Romania and the Czech Republic, as the
region's economies are hammered by the coronavirus crisis.
    The Czech central bank, which has slashed the cost of
borrowing by 200 basis points since the start of the pandemic,
left its two-week repo rate at 0.25% on Wednesday.
    "I think the main reason behind the weakness of the CEE
currencies this week ... is that on Tuesday the Hungarian
central bank surprised and cut interest rates," said Marcin
Sulewski, an economist at Santander Bank Polska.
    "Also looking at the global mood we see a pause in the
equity rally so the external environment wasn't supportive
either."
    By 0814 GMT the Hungarian forint had weakened 0.40% against
the euro to 353.4000 and the Czech crown softened 0.18% to
26.7550. The Polish zloty and Romanian leu
were little changed, trading very slightly weaker on the day at
4.4538 and 4.8421 respectively.
    The region's equity markets fell, with Prague's PX index
 posting the biggest losses to trade down 1.09%. 
    Stocks across Europe were trading lower as the STOXX 600
fell to its lowest since June 15, amid a surge in coronavirus
cases globally, prospects of a fresh trade tussle between the
United States and the European Union and a worrying forecast for
global economy this year.
    Benchmark Polish 10-year yields fell around 2
basis points to 1.366%.
    On Wednesday the Polish central bank bought bonds worth 2.4
billion zlotys ($606.35 million), including bonds issued by
state bank BGK as part of the government's "anti-crisis shield"
programme worth 1.99 billion zlotys. 
    Before the operation the central bank had said it could buy
bonds worth up to 12 billion zlotys.
    Czech 10-year yields were little changed at
0.785%.
    
           CEE      SNAPSHO   AT                      
           MARKETS  T        1014              
                             CET               
                    CURRENC                           
                    IES                        
                    Latest   Previou  Daily    Change
                             s                 
                    bid      close    change   in 2020
 Czech     <EURCZK  26.7550  26.7060   -0.18%   -4.94%
 crown     =>                                  
 Hungary   <EURHUF  353.400  352.000   -0.40%   -6.30%
 forint    =>             0        0           
 Polish    <EURPLN   4.4538   4.4530   -0.02%   -4.43%
 zloty     =>                                  
 Romanian  <EURRON   4.8421   4.8415   -0.01%   -1.11%
 leu       =>                                  
 Croatian  <EURHRK   7.5660   7.5753   +0.12%   -1.59%
 kuna      =>                                  
 Serbian   <EURRSD  117.530  117.570   +0.03%   +0.03%
 dinar     =>             0        0           
 Note:     calculated from            1800            
 daily                                CET      
 change                                        
                                                      
                    Latest   Previou  Daily    Change
                             s                 
                             close    change   in 2020
 Prague              909.31  919.310   -1.09%  -18.49%
                                   0           
 Budapest           37032.1  37199.4   -0.45%  -19.64%
                          2        6           
 Warsaw    <.WIG20  1778.98  1784.23   -0.29%  -17.26%
           >                                   
 Buchares           8561.64  8643.63   -0.95%  -14.19%
 t                                             
 Ljubljan  <.SBITO   858.41   858.41   +0.00%   -7.29%
 a         P>                                  
 Zagreb    <.CRBEX  1608.21  1613.91   -0.35%  -20.28%
           >                                   
 Belgrade  <.BELEX   666.99   667.46   -0.07%  -16.80%
           15>                                 
 Sofia     <.SOFIX   454.45   455.24   -0.17%  -20.01%
           >                                   
                                                      
                    Yield    Yield    Spread   Daily
                    (bid)    change   vs Bund  change
                                               in
 Czech                                         spread
 Republic                                      
   2-year  <CZ2YT=   0.0560  -0.0390   +074bp    -3bps
           RR>                              s  
   5-year  <CZ5YT=   0.3650  -0.1140   +106bp   -10bps
           RR>                              s  
           <CZ10YT   0.7850  -0.0060   +124bp    +1bps
 10-year   =RR>                             s  
 Poland                                               
   2-year  <PL2YT=   0.1670  -0.0120   +086bp    -1bps
           RR>                              s  
   5-year  <PL5YT=   0.7200  -0.0320   +141bp    -2bps
           RR>                              s  
           <PL10YT   1.3660  -0.0240   +182bp    -1bps
 10-year   =RR>                             s  
           FORWARD                                    
                    3x6      6x9      9x12     3M
                                               interba
                                               nk
 Czech     <CZKFRA     0.30     0.30     0.31     0.34
 Rep       ><PRIBO                             
           R=>                                 
 Hungary   <HUFFRA     0.62     0.57     0.53     0.75
           ><BUBOR                             
           =>                                  
 Poland    <PLNFRA     0.24     0.25     0.26     0.26
           ><WIBOR                             
           =>                                  
 Note:     are for ask                                
 FRA       prices                              
 quotes                                        
 ********************************************         
 ******************                            
 

    


($1 = 3.9581 zlotys)

 (Reporting by Alan Charlish in Warsaw, Anita Komuves in
Budapest and Luiza Ilie in Bucharest, Editing by William
Maclean)
  
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