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CEE MARKETS-Forint eases, central bank may try to talk currency down
August 21, 2017 / 9:11 AM / 4 months ago

CEE MARKETS-Forint eases, central bank may try to talk currency down

    * Forint weaker ahead of Tuesday's central bank meeting
    * Central bank may try to talk forint down-dealers
    * Zloty shrugs off unconfirmed report on PM

    By Sandor Peto
    BUDAPEST, Aug 21 (Reuters) - The forint eased on Monday,
while most central European currencies were treading water, amid
some expectations that the Hungarian central bank (NBH) could
try to weaken the currency in the statement it issues after a
rate-setting meeting on Tuesday.
    The region's most dovish central bank is expected to keep
its record-low interest rates on hold this year and next, not
tracking the footsteps of its Czech peer which early this month
delivered the European Union's first rate hike since 2012.
    With Hungary's inflation seen near 3 percent, the middle of
the NBH's target range, in coming years, the bank is unlikely to
rush into interest rate normalization.
    Robust regional economic growth, and a big Hungarian trade
surplus, have been boosted the forint to levels which
dealers said the bank probably finds too strong.
    "The bank would probably not like the forint to go near 300
against the euro and get stuck there," one Budapest-based
currency dealer said.
    "There is a slight chance that the bank will indicate that
(stance) somehow tomorrow, on top of what it said in the past.
But it will be one headline at the most, rather than a flurry,"
the dealer said.
    The forint touched a three-week high against the euro on
Monday before retreating. It traded at 303.7 by 0804 GMT, down
0.1 percent, but still near its strongest level since May 2015.
    Hungarian government bonds were steady. Recent economic
growth and inflation data should have fed the NBH's ultra-dovish
stance, Raiffeisen analyst Stephan Imre said in a note.
    "This should keep the steepness of the HGB (Hungarian
government bond) curve at elevated levels in the upcoming
period, with the latter mainly being a phenomenon driven by
ultra-low short-end levels on the back of excess liquidity
conditions," Imre added.
    In Bucharest, an auction of eight-year bonds could draw good
demand on Monday, as Romanian bonds underperformed regional
peers in the recent sessions, ING analysts said in a note.
    Regional assets were mostly rangebound in slow summer trade
ahead of the U.S. Federal Reserve's annual central banking
symposium in Jackson Hole later in the week.
    The zloty, trading flat, shrugging off a report in
daily Rzeczpospolita that the ruling Law and Justice (PiS) party
are considering replacing Prime Minister Beata Szydlo with PiS
leader Jaroslaw Kaczynski as a response to a more assertive
stance by President Andrzej Duda.
    A government spokesman was not immediately available to
comment.
               CEE MARKETS  SNAPSH   AT  1004 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.098  26.098   +0.00   3.48%
                                 0       5       %  
 Hungary                    303.70  303.33  -0.12%   1.69%
 forint                         00      00          
 Polish zloty               4.2759  4.2769   +0.02   2.99%
                                                 %  
 Romanian leu               4.5885  4.5892   +0.02  -1.17%
                                                 %  
 Croatian                   7.4030  7.3995  -0.05%   2.05%
 kuna                                               
 Serbian                    119.36  119.41   +0.04   3.34%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1030.2  1033.0  -0.27%   +11.7
                                 2       4              8%
 Budapest                   37004.  36969.   +0.10   +15.6
                                72      15       %      3%
 Warsaw                     2363.6  2359.8   +0.16   +21.3
                                 8       7       %      4%
 Bucharest                  8340.2  8302.8   +0.45   +17.7
                                 8       6       %      2%
 Ljubljana                  809.64  810.23  -0.07%   +12.8
                                                        3%
 Zagreb                     1903.5  1901.0   +0.13  -4.58%
                                 6       2       %  
 Belgrade                   721.07  721.01   +0.01   +0.52
                                                 %       %
 Sofia                      723.60  722.69   +0.13   +23.3
                                                 %      9%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.026       0   +068b   +1bps
                                                ps  
   5-year                    0.052       0   +033b   +1bps
                                                ps  
   10-year                   0.869  -0.013   +046b   -1bps
                                                ps  
 Poland                                                   
   2-year                     1.79  -0.024   +250b   -2bps
                                                ps  
   5-year                    2.652   0.009   +293b   +2bps
                                                ps  
   10-year                   3.315       0   +291b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR     0.6    0.69     0.8       0
               IBOR=>                               
 Hungary               <BU    0.21    0.25    0.31    0.15
               BOR=>                                
 Poland                <WI    1.76   1.787   1.832    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Sandor Peto; Editing by David Holmes)
  
 
 

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