July 31, 2020 / 9:58 AM / 11 days ago

CEE MARKETS-Currencies firm as Czech economy shrinks less than feared

    By Anita Komuves and Jason Hovet
    BUDAPEST/PRAGUE, July 31 (Reuters) - Central European
currencies edged up on Friday after the Czech Republic reported
a smaller-than-expected contraction in its second-quarter GDP.
    The Czech economy shrank by a record 10.7% year-on-year in
the quarter, lower than analysts' expectations of a 14.7%
decline. 
    "The worst is probably behind us in terms of GDP, as 2Q
should mark the bottom," ING said in a note. 
    "However, many economic indicators, such as unemployment,
will only deteriorate with a delay, so in this sense, the worst
is yet to come."
    The Czech crown was up 0.39% at 26.163 per euro,
near a four-and-a-half-month high touched on Monday. The
currency has strengthened 1.9% in July.
    The Hungarian forint was up 0.08% at 344.85 versus
the common currency, gaining 2.7% this month.
    The Polish zloty firmed 0.2% to 4.403 per euro,
strengthening 1% this month. 
    The Czech numbers followed dismal GDP data from the United
States and Germany. The economy of Germany, the most important
trading partner of the CEE region, contracted by 10.1% in the
second quarter.
    
   
 
    
    Both Hungary and Poland are slated to report second-quarter
GDP data on Aug. 14. Central Europe's economies, like other
European economies, were hammered by lockdowns prompted by the
pandemic, shutting down supply chains and factories.
    The auto industry, long a driver of economic growth in
central Europe, is likely to be one of the main drags on the
region's efforts to recover as some car producers in central
Europe expect output to drop 20%-25% this year. 
    The European Commission has forecast a 7.0% decline in GDP
this year in Hungary, a 7.8% fall in the Czech Republic.
Poland's GDP was seen declining 4.6%. 
    Prague's stocks gained 1.4% on Friday, while Warsaw's
equities were up 1.2%. Budapest's stocks were
down 0.17% while Bucharest's blue chip index was up
0.6%. 
    
                     CEE       SNAPSHO   AT                     
                     MARKETS   T        1112              
                                        CET               
                               CURRENC                          
                               IES                        
                               Latest   Previou  Daily    Change
                                        s                 
                               bid      close    change   in
                                                          2020
 EURCZK=  Czech      <EURCZK=  26.1630  26.2650   +0.39%  -2.79%
          crown      >                                    
 EURHUF=  Hungary    <EURHUF=  344.850  345.130   +0.08%  -3.97%
          forint     >               0        0           
 EURPLN=  Polish     <EURPLN=   4.4031   4.4120   +0.20%  -3.33%
          zloty      >                                    
 EURRON=  Romanian   <EURRON=   4.8320   4.8330   +0.02%  -0.90%
          leu        >                                    
 EURHRK=  Croatian   <EURHRK=   7.4850   7.4885   +0.05%  -0.53%
          kuna       >                                    
 EURRSD=  Serbian    <EURRSD=  117.520  117.620   +0.09%   +0.04
          dinar      >               0        0                %
          Note:      calculated from             1800           
          daily                                  CET      
          change                                          
                                                                
                               Latest   Previou  Daily    Change
                                        s                 
                                        close    change   in
                                                          2020
 .PX      Prague                888.95  876.940   +1.37%  -20.32
                                              0                %
 .BUX     Budapest             34739.0  34797.2   -0.17%  -24.62
                                     8        4                %
 .WIG20   Warsaw               1783.84  1763.22   +1.17%  -17.03
                                                               %
 .BETI    Bucharest            8488.85  8434.93   +0.64%  -14.92
                                                               %
 .SBITOP  Ljubljana  <.SBITOP   844.95   844.21   +0.09%  -8.74%
                     >                                    
 .CRBEX   Zagreb               1580.46  1577.54   +0.19%  -21.66
                                                               %
 .BELEX1  Belgrade   <.BELEX1   670.66   670.42   +0.04%  -16.34
 5                   5>                                        %
 .SOFIX   Sofia                 439.90   439.60   +0.07%  -22.57
                                                               %
                                                                
                               Yield    Yield    Spread   Daily
                               (bid)    change   vs Bund  change
                                                          in
          Czech                                           spread
          Republic                                        
 CZ2YT=R    2-year   <CZ2YT=R   0.1820   0.1080   +089bp   +10bp
 R                   R>                                s       s
 CZ5YT=R    5-year   <CZ5YT=R   0.3860  -0.0490   +112bp   -4bps
 R                   R>                                s  
 CZ10YT=    10-year  <CZ10YT=   0.8270   0.0230   +138bp   +3bps
 RR                  RR>                               s  
          Poland                                                
 PL2YT=R    2-year   <PL2YT=R   0.1170  -0.0040   +082bp   -1bps
 R                   R>                                s  
 PL5YT=R    5-year   <PL5YT=R   0.6700  -0.0200   +141bp   -1bps
 R                   R>                                s  
 PL10YT=    10-year  <PL10YT=   1.2790  -0.0070   +183bp   +0bps
 RR                  RR>                               s  
                     FORWARD                                    
                               3x6      6x9      9x12     3M
                                                          interb
                                                          ank
          Czech Rep               0.31     0.32     0.36    0.34
                     <PRIBOR=                             
                     >                                    
          Hungary                 0.60     0.58     0.57    0.60
                                                          
          Poland                  0.19     0.19     0.19    0.23
                                                          
          Note: FRA  are for ask                                
          quotes     prices                               
          **********************************************        
          ****************                                
 

    
 (Additional reporting by Alan Charlish in Warsaw; Editing by
Aditya Soni)
  
 
 
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