April 28, 2020 / 8:17 AM / a month ago

CEE MARKETS-Currencies ease, Hungarian central bank meeting in focus

    BUCHAREST, April 28 (Reuters) - Central European currencies
edged lower against the euro in early trade on Tuesday as a new
fall in oil prices tempered risk appetite, while in Hungary
investors were waiting to see the scope of the central bank's
planned asset-purchasing programme.
    The National Bank of Hungary holds a rate-setting meeting
later on Tuesday. The bank is expected to hold its key rates
after a surprise increase in lending rates early this month, a
Reuters poll showed.
    But policymakers are expected to detail the scale and terms
of the asset-purchasing programme it signalled earlier this
    "If the statement stresses that the asset-purchasing
programme is being introduced in order to help stabilize the
government bond market, and that they will intervene only when
specific conditions are met, then the exchange rate of the
forint might strengthen further" an Equilor research note said.
    ING analysts agreed. "We expect the NBH to announce
conditional financial stability focused QE today, aiming to help
the Hungarian bond market while not harming the forint," the
bank said in a note.
    The forint hit a record low near 370 versus the euro on
April 1st and regained some of its losses after the central bank
offered a new one-week deposit for banks at 0.9% on Wednesday in
a surprise move that analysts said amounted to an "implicit rate
    By 0750 GMT, the forint was trading at 355.5500 to
the euro, down 0.1% on the day. 
    "The forint has been relatively stable and the Hungarian
government managed to get good investor appetite for its new
foreign bond issuance, which has set a more reassured tone in
the market," Tatha Ghose of Commerzbank wrote in a note.
    "We do not expect any change to conventional monetary policy
in coming months, but we are likely to see a continuous stream
of micro interventions in lending, regulation and debt relief,"
he added.
    Hungary has sold 2 billion euros worth of 6-year and 12-year
foreign currency bonds to cover a surge in financing needs due
to the coronavirus pandemic.
    Elsewhere, the Czech crown was flat and the Polish
zloty and the Romanian leu each traded 0.1%
lower versus the euro.
    Romania's consolidated budget deficit widened to 1.7% of
gross domestic product in the first quarter compared with a gap
of 0.7% at the end of February as the coronavirus outbreak led
to a plunge in revenue, the finance ministry said.
    With the deficit above EU limits even before the new
coronavirus outbreak, Romanian assets and ratings have been
under pressure.
    Analysts said currencies would likely tread water ahead of
U.S. Federal Reserve and European Central Bank meetings later
this week.
    Stock markets were mixed. The blue chip index in Prague
 was flat while Budapest was up 0.3% by 0757 GMT.
Warsaw's was up0.8% and Bucharest's up 0.4%.
            CEE       SNAPSHO   AT                      
            MARKETS   T        0957              
                      Latest   Previou  Daily    Change
                      bid      close    change   in 2020
 Czech      <EURCZK=  27.3000  27.3010   +0.00%   -6.84%
 crown      >                                    
 Hungary    <EURHUF=  355.550  355.200   -0.10%   -6.86%
 forint     >               0        0           
 Polish     <EURPLN=   4.5370   4.5330   -0.09%   -6.18%
 zloty      >                                    
 Romanian   <EURRON=   4.8445   4.8410   -0.07%   -1.16%
 leu        >                                    
 Croatian   <EURHRK=   7.5510   7.5527   +0.02%   -1.40%
 kuna       >                                    
 Serbian    <EURRSD=  117.620  117.680   +0.05%   -0.04%
 dinar      >               0        0           
 Note:      calculated from             1800            
 daily                                  CET      
                      Latest   Previou  Daily    Change
                               close    change   in 2020
 Prague                858.91  859.330   -0.05%  -23.01%
 Budapest             33292.1  33196.8   +0.29%  -27.76%
                            8        5           
 Warsaw               1604.09  1591.97   +0.76%  -25.39%
 Bucharest            8050.37  8019.11   +0.39%  -19.31%
 Ljubljana  <.SBITOP   778.40   773.49   +0.63%  -15.93%
 Zagreb               1581.21  1573.92   +0.46%  -21.62%
 Belgrade   <.BELEX1   669.18   676.83   -1.13%  -16.53%
 Sofia                 445.09   445.33   -0.05%  -21.66%
                      Yield    Yield    Spread   Daily
                      (bid)    change   vs Bund  change
 Czech                                           spread
   2-year   <CZ2YT=R   0.6270  -0.0740   +130bp    -8bps
            R>                                s  
   5-year   <CZ5YT=R   1.0080   0.0490   +163bp    +5bps
            R>                                s  
   10-year  <CZ10YT=   1.2630  -0.0540   +171bp    -6bps
            RR>                               s  
   2-year   <PL2YT=R   0.6080   0.0070   +128bp    +1bps
            R>                                s  
   5-year   <PL5YT=R   1.0190   0.0130   +164bp    +1bps
            R>                                s  
   10-year  <PL10YT=   1.3990   0.0170   +184bp    +1bps
            RR>                               s  
            FORWARD   RATE     AGREEME                  
                      3x6      6x9      9x12     3M
 Czech Rep               0.28     0.30     0.33     0.91
 Hungary                 1.20     1.12     1.08     1.10
 Poland                  0.22     0.23     0.23     0.69
 Note: FRA  are for ask                                 
 quotes     prices                               
 (Reporting by Luiza Ilie in Bucharest and Anita Komuves in
Budapest; Editing by Giles Elgood)
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