Reuters logo
CEE MARKETS-Forint eases, central bank seen pushing it even lower
November 21, 2017 / 10:51 AM / 25 days ago

CEE MARKETS-Forint eases, central bank seen pushing it even lower

    * Hungarian central bank seen announcing new easing measures
    * Most likely Hungarian measure is longer fx swap-traders
    * Forint eases slightly, may weaken further on central bank
    * Zloty, crown firm slightly further in slow markets

    By Sandor Peto
    BUDAPEST, Nov 21 (Reuters) - The forint eased slightly on
Tuesday, underperforming the Polish zloty, before a meeting of
Hungary's central bank (NBH) which may announce new measures to
ease monetary conditions.
    The NBH, regarded as one of the most dovish central banks in
the world, is expected to keep its base rate and overnight
deposit rate on hold according to a Reuters poll of analysts.

    But the bank, led by Gyorgy Matolcsy, a strong ally of Prime
Minister Viktor Orban who is preparing to face an election, has
signalled it could take further measures to push long-term
market interest rates lower.
    The aim is to encourage commercial banks to boost mortgage
lending at low fixed rates.
    The rate decision is due at 1300 GMT. 
    Traders have already priced in new measures which could
include a long-term fx swap tool, analysts said.
    The forint traded steady at 312.41 against the
euro at 0939 GMT, near the near seven-month low of 312.86 it
reached last week. 
    "It is not moving now, but the central bank has often caused
surprises and the market reaction to its announcements will be
very interesting," one Budapest-based fixed income trader said.
    The expected measures should not weaken the forint in the
long term, but there were signs some investors could still try
to push it lower on the day, the trader said.
    "Even if it reaches the year's weakest levels beyond 314,
that will not be lasting. I expect it to return to its current
levels soon," a currency dealer said. Strong economic growth
across the region and Hungary's big trade surplus support the
forint.
    The forint has shed 1.2 percent so far this year
due to the NBH's loose policy.
    The bank's liquidity injections and expectations of more
easing have also helped Hungarian government bond yields fall to
record lows in the past weeks, with their curve flattening. 
    "Our bullish conviction for 10y HGB (ten-year Hungarian
bonds) remains intact although the bond yield already exhibited
about 50-60 percent of the tightening potential," Raiffeisen
analyst Gintaras Shlizhyus said in a note.
    In contrast, Poland's zloty has firmed by more
than 4 percent this year, buoyed by robust economic growth and
expectations for central bank rate hikes.
    Both the zloty and the Czech crown rose slightly
on Tuesday, while the Romanian leu was flat. 
    
               CEE MARKETS  SNAPSH   AT  1059 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.542  25.546   +0.02   5.74%
                                 0       0       %  
 Hungary                    312.62  312.43  -0.06%  -1.22%
 forint                         00      00          
 Polish zloty               4.2305  4.2332   +0.06   4.10%
                                                 %  
 Romanian leu               4.6490  4.6488   +0.00  -2.45%
                                                 %  
 Croatian                   7.5630  7.5663   +0.04  -0.10%
 kuna                                            %  
 Serbian                    118.69  118.64  -0.04%   3.93%
 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                     1051.2  1053.5  -0.22%   +14.0
                                 5       5              7%
 Budapest                   39420.  39359.   +0.16   +23.1
                                57      28       %      8%
 Warsaw                     2470.1  2468.0   +0.08   +26.8
                                 8       9       %      1%
 Bucharest                  7823.2  7813.8   +0.12   +10.4
                                 0       5       %      2%
 Ljubljana                  788.19  787.75   +0.06   +9.84
                                                 %       %
 Zagreb                     1853.2  1845.2   +0.43  -7.10%
                                 3       7       %  
 Belgrade                   730.71  733.93  -0.44%   +1.86
                                                         %
 Sofia                      671.40  669.14   +0.34   +14.4
                                                 %      9%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.433    0.06   +115b   +7bps
                                                ps  
   5-year                    1.031   0.141   +138b   +15bp
                                                ps       s
   10-year                   1.806   0.063   +146b   +8bps
                                                ps  
 Poland                                                   
   2-year                    1.612  -0.001   +233b   +1bps
                                                ps  
   5-year                    2.649   0.023   +300b   +3bps
                                                ps  
   10-year                   3.438  -0.002   +309b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.05    1.25    1.38       0
               IBOR=>                               
 Hungary               <BU    0.08   0.095    0.12       0
               BOR=>                                
 Poland                <WI    1.77    1.84   1.915    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Sandor Peto; Editing by Andrew Heavens)
  
 
 

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below