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CEE MARKETS-Crown retreats after Czech central bank chief says no rush to hike
September 5, 2017 / 10:21 AM / 18 days ago

CEE MARKETS-Crown retreats after Czech central bank chief says no rush to hike

    * Czech central banker: rate hike does not have to come this
year
    * Crown retreats to 26.1/euro, its typical level this summer
    * Data, including Czech wages, confirm consumption-fuelled
growth
    * Warsaw leads stocks rebound, dinar steady despite PM
comments

    By Sandor Peto
    BUDAPEST, Sept 5 (Reuters) - The Czech crown weakened
slightly on Tuesday after comments by the central bank chief
cooled expectations of a rapid rise in interest rates following
the highest wage growth figures in a decade.
    After hawkish comments from two other central bank board
members lifted the crown to 26 per euro last week, Governor Jiri
Rusnok told reporters that the Czech National Bank (CNB) would
not necessarily need to raise interest rates again in 2017.

    The crown eased 0.1 percent to 26.1 after his
comments, within the range between 26 and 26.2 to which it has
held since July. 
    The CNB raised its main rate by 20 basis points to 0.25
percent last month -- the first European Union central bank to
increase borrowing costs since 2012. 
    But the crown remains heavily overbought after foreign
investors stocked up ahead of the central bank's decision in
April to remove a cap on the currency, creating uncertainty over
the future direction of the exchange rate.    
    Rusnok spoke on Tuesday after data showed a 7.6 percent
year-on-year jump in gross wages in April-June, the biggest
quarterly increase since early 2008.
    Other data released across the EU's east also confirmed that
economic growth remains strong, partly driven by robust wage
growth as employers compete to keep workers lured by much higher
wages in Western countries.
    Central European currencies were mixed and rangebound.
    The zloty, firming 0.1 percent, set a six-week
high against the euro ahead of the Polish central bank's meeting
on Wednesday.
    Strong growth has not boosted inflation rates above central
bank targets in the region, except in the Czech Republic. The
Polish bank is expected to keep rates at record lows until late
2018.
    The dinar was steady even though Prime Minister
Ana Brnabic told Reuters that Serbia may not seek a new loan
from the International Monetary Fund, and the economy could grow
2.5 percent this year, less than expected.
    Dealers have said the dinar is likely to weaken later this
year, but in the summer season it got support from foreign
currency inflows for investments in a shallow currency market. 
    Regional stocks firmed, recovering from Monday's decline
caused by risk aversion after a nuclear test in North Korea. 
    Warsaw's bluechip index posted the biggest daily
gain, rising one percent, driven by 2.7 percent jump in the
shares of copper producer KGHM to six-month highs after
copper prices hit a three-year high in London.
    
               CEE MARKETS  SNAPSH   AT  1051 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.100  26.086  -0.05%   3.48%
                                 0       0          
 Hungary                    306.25  306.14  -0.04%   0.84%
 forint                         00      00          
 Polish zloty               4.2350  4.2405   +0.13   3.99%
                                                 %  
 Romanian leu               4.5985  4.5995   +0.02  -1.38%
                                                 %  
 Croatian                   7.4165  7.4155  -0.01%   1.87%
 kuna                                               
 Serbian                    119.57  119.55  -0.02%   3.16%
 dinar                          00      00          
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1024.2  1026.1  -0.19%   +11.1
                                 1       6              3%
 Budapest                   37539.  37465.   +0.20   +17.3
                                71      26       %      0%
 Warsaw                     2544.8  2519.4   +1.01   +30.6
                                 4       2       %      4%
 Bucharest                  8055.7  8028.5   +0.34   +13.7
                                 2       4       %      0%
 Ljubljana                  822.98  818.69   +0.52   +14.6
                                                 %      9%
 Zagreb                     1899.3  1902.5  -0.17%  -4.79%
                                 5       6          
 Belgrade                   724.79  727.30  -0.35%   +1.03
                                                         %
 Sofia                      709.34  705.70   +0.52   +20.9
                                                 %      6%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.048   0.171   +069b   +18bp
                                                ps       s
   5-year                    0.127       0   +047b   +0bps
                                                ps  
   10-year                   0.945    0.06   +057b   +5bps
                                                ps  
 Poland                                                   
   2-year                      1.7   0.009   +244b   +2bps
                                                ps  
   5-year                    2.597  -0.003   +294b   +0bps
                                                ps  
   10-year                   3.272   0.005   +290b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.63    0.81     0.9       0
               IBOR=>                               
 Hungary               <BU    0.15     0.2    0.24    0.15
               BOR=>                                
 Poland                <WI    1.78    1.77    1.83    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Aleksandar Vasovic in Belgrade;
Editing by Catherine Evans)
  
 
 

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