September 21, 2018 / 10:32 AM / 2 months ago

CEE MARKETS-Currencies firm on dollar weakness, equities droop

    * Rise vs dollar spills over into CEE units' euro rates
    * CEE equities do not track Asian, Western Europe rise
    * FTSE change may keep lid on Polish shares-analyst

    By Sandor Peto
    BUDAPEST, Sept 21 (Reuters) - Central European currencies
rose on Friday against the euro in tandem with persistent dollar
weakness, extending several days of gains and hitting new
multi-month highs versus the dollar.
    The forint gained 0.2 percent against the euro to
323.49 by 0931, while the zloty and the Czech crown
 firmed 0.1 percent, reversing a six-month long trend. 
    "This is happening through the dollar which has weakened ...
but trading interest is quite low," one Budapest-based
fixed-income trader said.    
    "The Fed rate hike expected for next week should strengthen
the dollar in theory, but it may have been already priced in,"
he said.
    The Czech central bank is expected to deliver its third
monthly interest rate hike in a row next week.
    Its past two increases had little immediate effect on the
crown but expectations of an imminent hike and more to follow in
coming months helped it hit a 5-month high against the euro this
week.
    Central European stocks failed to track gains in Asian and
Western European markets due to various index changes, including
Poland's transfer to "developed market" from "advanced emerging"
within FTSE global indexes, Equilor analyst Balint Kovacs said.
    Poland's blue-chip index was flat, while Prague
 fell 0.6 percent, retreating from a 4-month high.
    "That could cause a net outflow," Kovacs said.
    Government bond yield mostly dropped slightly in the region.
    A Reuters poll of analysts showed that the Czech Republic is
expected to lead a rise in 10-year government bond yields in
Central Europe in the next 12 months as the European Central
Bank moves closer to increasing euro zone interest rates.

    In Romania, the leu was flat, underperforming
regionally as the ruling Social Democrat Party met after some
senior party members urged leader Liviu Dragnea to resign.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1131 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.5530   25.5870    +0.13%    -0.04%
 crown      >                                       
 Hungary    <EURHUF=  323.4900  324.1000    +0.19%    -3.89%
 forint     >                                       
 Polish     <EURPLN=    4.2920    4.2962    +0.10%    -2.69%
 zloty      >                                       
 Romanian   <EURRON=    4.6565    4.6559    -0.01%    +0.50%
 leu        >                                       
 Croatian   <EURHRK=    7.4250    7.4265    +0.02%    +0.07%
 kuna       >                                       
 Serbian    <EURRSD=  118.0300  118.1500    +0.10%    +0.40%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1096.87  1103.640    -0.61%    +1.74%
                                       0            
 Budapest             36056.06  36134.33    -0.22%    -8.43%
 Warsaw                2257.80   2258.63    -0.04%    -8.26%
 Bucharest             8392.26   8354.33    +0.45%    +8.23%
 Ljubljana  <.SBITOP    854.09    855.34    -0.15%    +5.92%
            >                                       
 Zagreb                1800.90   1804.74    -0.21%    -2.28%
 Belgrade   <.BELEX1    730.54    730.24    +0.04%    -3.85%
            5>                                      
 Sofia                  625.51    627.08    -0.25%    -7.67%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.5460    0.0820   +210bps     +9bps
            R>                                      
   5-year   <CZ5YT=R    1.8340   -0.0040   +199bps     +1bps
            R>                                      
   10-year  <CZ10YT=    2.1910   -0.0100   +173bps     +0bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5730   -0.0050   +212bps     +0bps
            R>                                      
   5-year   <PL5YT=R    2.5270   -0.0080   +268bps     +0bps
            R>                                      
   10-year  <PL10YT=    3.2180   -0.0150   +275bps     +0bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                1.95      2.14      2.27      1.56
            <PRIBOR=                                
            >                                       
 Hungary                  0.41      0.63      0.89      0.19
                                                    
 Poland                   1.78      1.80      1.85      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Luiza Ilie in Bucharest
Editing by Louise Ireland)
  
 
 
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