May 14, 2018 / 10:04 AM / 11 days ago

CEE MARKETS-Currencies firm, Romanian yields up after CPI rise

    * Currencies gain as dollar buying stalls, bond yields up
    * Romania's annual inflation hits 5-year high at 5.2 pct
    * Stop-loss selling boosts Hungarian bond yields

 (Adds Polish current account figures, Romanian bond auction,
stop-loss selling of bonds in Budapest)
    By Sandor Peto
    BUDAPEST, May 14 (Reuters) - Central European currencies
firmed on Monday as the dollar lost more ground against the
euro, while Romanian bond yields traded close to their highest
levels since 2014 after inflation hit a new 5-year high.
    The dollar's third straight session of losses against the
euro provided support, as did expectations that first-quarter
region-wide economic output figures due on Tuesday will show
robust growth.
    The region's main currencies firmed roughly 0.1 percent
apiece against the euro, except for the forint which
eased slightly.
    The zloty traded at 4.262 against the euro at 1344
GMT, after March data showed a narrower-than-expected current
account deficit. 
    On the downside, Poland's central bank might reaffirm after
its policy meeting on Wednesday that it will maintain record-low
interest rates for years, analysts say.
    That could keep the zloty in the 4.25-26 zone, Raiffeisen
analyst Gintaras Shlizhyus said in a note, adding that the zloty
could firm to 4.23 against the euro if the dollar weakens
towards 1.21 versus the euro.
    The Polish and the Hungarian central banks have indicated
repeatedly that they may keep interest rates on hold for years.
    Their Czech peer has been raising interest rates since
August, and Romania since January, to defend their inflation
targets. Prices have been surging in Romania and the Czech
inflation goal at 2 percent is the lowest in the region.
    According to April figures released on Monday, Romania's
annual inflation hit a new 5-year high of 5.2 percent in April.
 
    Romanian government bonds traded near their highest levels
for four years again after some retreat in yields in Central
Europe on Friday following two weeks of rise.
    Romanian yields rose by 2-3 basis points (bps) almost along
the entire curve, even though bond yields have drifted off early
highs in the region by late trade.
    The finance ministry sold more Oct. 2021 government bonds
than planned, letting the average yield rise to 4.16 percent
from 3.56 percent at an auction three weeks ago.
    The yield on Romania's 10-year bonds, bid at 4.81 percent,
was steady. 
    It has risen about 20 bps this month, in line with its
Polish peer.
    Hungary's 10-year bonds have underperformed, with yields
rising by almost 40 bps in the same period and jumping 6 basis
points to 2.86 percent on Monday.
    "The yield rise picked up in a stop(-loss) wave in the
morning, but they have come back a bit," one Budapest-based
fixed income trader said.
    "This rise should stop sooner or later, but much will depend
on what happens in core markets, like the United States," the
trader added.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1544 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.4810   25.5080    +0.11%    +0.24%
 crown      >                                       
 Hungary    <EURHUF=  315.4900  315.2500    -0.08%    -1.45%
 forint     >                                       
 Polish     <EURPLN=    4.2620    4.2650    +0.07%    -2.01%
 zloty      >                                       
 Romanian   <EURRON=    4.6300    4.6350    +0.11%    +1.07%
 leu        >                                       
 Croatian   <EURHRK=    7.3820    7.3895    +0.10%    +0.65%
 kuna       >                                       
 Serbian    <EURRSD=  118.2000  118.2000    +0.00%    +0.25%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1103.42  1107.120    -0.33%    +2.34%
                                       0            
 Budapest             38275.12  37644.06    +1.68%    -2.80%
 Warsaw                2322.59   2329.36    -0.29%    -5.63%
 Bucharest             8754.23   8775.91    -0.25%   +12.90%
 Ljubljana  <.SBITOP    888.49    884.17    +0.49%   +10.18%
            >                                       
 Zagreb                1839.44   1845.24    -0.31%    -0.19%
 Belgrade   <.BELEX1    737.44    737.57    -0.02%    -2.94%
            5>                                      
 Sofia                  644.57    645.51    -0.15%    -4.85%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    0.8780    0.1500   +142bps    +13bps
            R>                                      
   5-year   <CZ5YT=R    1.3290    0.0180   +135bps     -1bps
            R>                                      
   10-year  <CZ10YT=    1.8630    0.0040   +126bps     -3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5570   -0.0010   +210bps     -3bps
            R>                                      
   5-year   <PL5YT=R    2.4840    0.0020   +251bps     -3bps
            R>                                      
   10-year  <PL10YT=    3.2450    0.0220   +264bps     -2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                0.99      1.14      1.27      0.90
            <PRIBOR=                                
            >                                       
 Hungary                  0.07      0.10      0.18      0.05
                                                    
 Poland                   1.74      1.76      1.80      1.70
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Luiza Ilie in Bucharest and Marcin
Goettig in Warsaw)
  
 
 
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