August 9, 2018 / 9:39 AM / 9 days ago

CEE MARKETS-Dinar bucks easing trend, Serbian central bank seen holding fire

    * Serbian central bank seen keeping 3 pct main rate on hold
    * Dinar firms, risk aversion weakens other CEE units
    * Czech CPI retreat does not remove rate hike expectations

    By Sandor Peto
    BUDAPEST, Aug 9 (Reuters) - Central Europe's main currencies
eased on Thursday amid a rise in risk aversion in global
markets, with fresh U.S. sanctions knocking down the rouble and
Turkey's lira also falling further.
    The dinar bucked the trend, firming by 0.1 percent
to 117.92 against the euro by 0857 GMT ahead of the Serbian
central bank's meeting.
    The bank is expected to keep the region's highest benchmark
rate of three percent on hold, not cutting it further despite 
strength in the dinar which it has reined in by repeated market
interventions in the past months.
    The dinar is buoyed by investments and remittances from
Serbians working abroad.
    Serbia's inflation rose to 2.3 percent in June from 2.1
percent, but is well within the bank's 1.5-4.5 percent target
range.
    Elsewhere, Czech annual inflation retreated to 2.3 percent
in July from 2.6 percent in June according to data published on
Thursday.
    The figure is still above the Czech central bank's two
percent target and in line with expectations, therefore it does
not change expectations that the bank will continue to increase
interest rates to fight inflation, analysts said.
    "Although the July result was (by 0.3 percentage point)
below the central bank's expectation, we don't assume that the
bank would change its rhetoric on monetary policy," said Pavel
Sobisek, UniCredit UniCredit's Czech unit. 
    Likely strong core inflation could even bring forward the
next CNB rate hike, Citigroup said in a note, adding that the
hike could come earlier than the fourth quarter.
    The Czech crown eased 0.1 percent to 25.615 against the euro
by 0857 GMT.
    The global risk aversion further weakened the forint
 and the zloty They shed a quarter of a
percent, trading at 320.10 and 4.2722, respectively, still near
multi-month highs.
    Regional stock indices mostly eased, led by 0.6 percent loss
in Prague's main index.
    Belgrade's index, however, jumped by 2.4 percent,
driven by an almost 10 percent surge in the shares of Serbia's
second-largest lender, Komercijalna Banka [BEl:KMBN]
    The government plans to sell the bank, according to an
announcement made late last month.     
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1057 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.6150   25.5960    -0.07%    -0.28%
 crown      >                                       
 Hungary    <EURHUF=  320.1000  319.3000    -0.25%    -2.87%
 forint     >                                       
 Polish     <EURPLN=    4.2722    4.2616    -0.25%    -2.24%
 zloty      >                                       
 Romanian   <EURRON=    4.6430    4.6420    -0.02%    +0.79%
 leu        >                                       
 Croatian   <EURHRK=    7.4380    7.4325    -0.07%    -0.10%
 kuna       >                                       
 Serbian    <EURRSD=  117.9200  118.0200    +0.08%    +0.49%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1077.89  1084.800    -0.64%    -0.03%
                                       0            
 Budapest             36754.97  36954.16    -0.54%    -6.66%
 Warsaw                2302.15   2307.12    -0.22%    -6.46%
 Bucharest             8226.97   8231.38    -0.05%    +6.10%
 Ljubljana  <.SBITOP    884.42    884.04    +0.04%    +9.68%
            >                                       
 Zagreb                1837.08   1838.74    -0.09%    -0.31%
 Belgrade   <.BELEX1    760.63    742.96    +2.38%    +0.11%
            5>                                      
 Sofia                  640.86    640.46    +0.06%    -5.40%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.2240   -0.0450   +183bps     -5bps
            R>                                      
   5-year   <CZ5YT=R    1.8120    0.0740   +205bps     +8bps
            R>                                      
   10-year  <CZ10YT=    2.2430    0.0280   +185bps     +3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6100   -0.0060   +221bps     -1bps
            R>                                      
   5-year   <PL5YT=R    2.5060    0.0160   +274bps     +2bps
            R>                                      
   10-year  <PL10YT=    3.1290    0.0090   +273bps     +1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                1.65      1.75      1.95      1.45
            <PRIBOR=                                
            >                                       
 Hungary                  0.39      0.62      0.82      0.16
                                                    
 Poland                   1.74      1.75      1.80      1.70
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Aleksandar Vasovic in Belgrade/Robert
Muller and Jason Hovet in Prague, Editing by William Maclean)
  
 
 
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