December 18, 2017 / 3:25 PM / 6 months ago

CEE MARKETS-Crown softens as market focuses on rate meeting, other currencies firm

    * Czech central bank raises banks' countercyclical buffer
rate
    * Fails to lift the crown, main rate seen on hold on
Thursday
    * Warsaw/Brussels showdown watched
    * Dinar bid at 4-week-highs as Fitch and S&P upgrade Serbia

 (Adds Hungarian government bonds yield decline, Polish wages)
    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Dec 18 (Reuters) - The crown eased slightly
on Monday on rising expectations that the Czech central bank
(CNB) will not lift its main interest rates when it meets later
this week.
    The CNB did raise domestic banks' countercyclical buffer
rate to 1.25 percent on Monday, from 1 percent, but the crown
did not react.
    The crown eased a tad to 25.68 against the euro by
1356 GMT, off Friday's seven-week low of 25.72 set as
expectations for a rate hike when the bank meets on Thursday
dwindled.
    Recent tame inflation data from the region and the prospect
of dollar gains if U.S. lawmakers pass a tax cut bill later this
week, are not supportive for central and eastern European
currencies.
    "(But) the major CEE (central and eastern European)
currencies are currently profiting from a solid EM (emerging
markets) and risk-taking sentiment," Raiffeisen analyst Gunter
Deuber said in a note.
    The forint got additional support from the closing of short
government bond positions, even as the Hungarian central bank is
expected to reaffirm its loose policy stance on Tuesday. 
    Primary dealers were informed by the government debt
management agency that it would not hold its regular bi-weekly
bond tender this week, one Budapest fixed income trader said.
    AKK confirmed that to Reuters.
    Hungarian bond yields fell 4-6 basis points from Friday's
fixing along the curve.
    Interest rates in Poland are likely to stay unchanged by the
end of 2019, rate setter Kamil Zubelewicz was quoted as saying
by the daily Parkiet. 
    The zloty firmed 0.1 percent. The Romanian leu
 gained a quarter or a percent.
    Corporate wages in Poland surged 6.5 percent in November
from a year earlier, data showed on Monday, although that was
below analysts' forecast of 7.1 percent. 
    The European Commission on Wednesday may trigger a so-called
"Article 7" procedure against Warsaw over Poland's planned
overhaul of its judiciary.
    That would bring Poland one step closer to losing its voting
right in the EU, but any financial consequence remained a remote
risk, BZ WBK analysts said in a note.
    The dinar was briefly bid at 4-week highs at 118.5
against the euro on Monday, after Fitch and Standard & Poor's
upgraded Serbia's credit rating late on Friday.
    By late trade, the dinar had retreated to 118.8, down 0.1
percent from Friday.
    The rating upgrades should nudge Serbia's central bank
towards cutting the region's highest interest rates further, the
bank's former governor, Dejan Soskic, told the N1 television
channel.
    "Another and perhaps more important factor was payment of
VAT by companies which was on Friday and that boosted demand for
the dinar," one Belgrade-based dealer said.
    In equity markets, a 4 percent jump in Polish copper
producer KGHM helped Warsaw's blue-chip index
rise by more than one percent. In Budapest, drugmaker Richter
 gained 2.3 percent after good drug trial results.

    
               CEE MARKETS  SNAPSH   AT  1456 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.680  25.675  -0.02%   5.17%
                                 0       5          
 Hungary                    313.57  314.02   +0.15  -1.51%
 forint                         00      50       %  
 Polish zloty               4.2075  4.2110   +0.08   4.67%
                                                 %  
 Romanian leu               4.6195  4.6308   +0.24  -1.83%
                                                 %  
 Croatian                   7.5435  7.5465   +0.04   0.15%
 kuna                                            %  
 Serbian                    118.80  118.65  -0.13%   3.83%
 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                     1067.1  1062.0   +0.48   +15.7
                                 6       5       %      9%
 Budapest                   38675.  38657.   +0.05   +20.8
                                40      37       %      5%
 Warsaw                     2438.5  2416.9   +0.89   +25.1
                                 3       5       %      9%
 Bucharest                  7667.3  7603.3   +0.84   +8.22
                                 1       1       %       %
 Ljubljana                  792.17  793.01  -0.11%   +10.3
                                                        9%
 Zagreb                     1845.6  1859.3  -0.74%  -7.48%
                                 7       4          
 Belgrade                   746.43  743.52   +0.39   +4.05
                                                 %       %
 Sofia                      662.74  664.67  -0.29%   +13.0
                                                        1%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.343  -0.002   +104b   -3bps
                                                ps  
   5-year                    0.722  -0.043   +104b   -6bps
                                                ps  
   10-year                   1.462   0.037   +116b   +4bps
                                                ps  
 Poland                                                   
   2-year                    1.676  -0.005   +237b   -3bps
                                                ps  
   5-year                    2.609  -0.009   +293b   -2bps
                                                ps  
   10-year                   3.241  -0.002   +294b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.04    1.24    1.39       0
               IBOR=>                               
 Hungary               <BU    0.03    0.06   0.195    0.03
               BOR=>                                
 Poland                <WI    1.77    1.81    1.92    1.72
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 

 (Additional reporting by Aleksandar Vasovic in Belgrade,
editing by Louise Heavens and Susan Fenton)
  
 
 
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