February 13, 2020 / 10:46 AM / in 10 days

CEE MARKETS-Forint firms as c.bank vows to act on inflation

    WARSAW, Feb 13 (Reuters) - The Hungarian forint
firmed on Thursday after the central bank said it will act to
stabilise inflation following a higher-than-expected CPI
reading.
    Headline inflation rose to 4.7% year-on-year in
January, scaling its highest level since December 2012, data
showed. 
    The print exceeded market forecasts of 4.3% and the central
bank's target range of 3% with a tolerance band of a percentage
point on both sides.
    The central bank's deputy governor, Marton Nagy, told
reporters on the sidelines of a conference that the bank will
use all tools at its disposal to stabilise inflation at its 3%
target on its five- to eight-quarter policy horizon.

    At 0944 GMT, the forint was bid at 338.31 against the euro,
0.4% stronger on the day, after hitting a record low of 340.31
on Wednesday.
    The National Bank of Hungary (NBH) is the most dovish in the
region and has kept its benchmark rate at a record low of 0.9%
despite rising inflation, a stance which contrasts with the
Czech central bank, which last week hiked interest rates in the
face of price pressures, boosting the crown.
    The Czech currency gave up some gains after
hitting a fresh multi-year high on Wednesday. At 0946 GMT, it
was bid down 0.19% against the euro at 24.877.
    The Polish zloty fell 0.11% to 4.2553, while the
Romanian leu was little changed at 4.7650.
    Romania's consumer price inflation slowed to 3.6% on the
year in January from 4.0% in December, matching market
expectations in a Reuters poll, data from the National
Statistics Board showed.            
    "Today's reading is consistent with our view that
inflationary pressures are likely to ease in 1H20 and inflation
will therefore remain mostly inside the central bank target
band," Romanian bank BCR said in a note.
    The region's main stock indexes for the most part shrugged
of fears about a jump in new coronavirus deaths and infections
in China to trade broadly flat, with the exception being
Warsaw's WIG 20 index, which fell more than 1%.
    The worst performer in Warsaw was miner JSW, which
fell over 2% after its 2020-2030 strategy update disappointed
investors.
    Benchmark Polish 10-year yields continued to
rise, going up by 1.6 basis points to 2.178%. Czech 10-year
yields were flat at 1.561%.
    "It cannot be ruled out that the level of risk aversion is
already so significant that investors will stop being involved
in Polish bonds," Bank Millennium analysts said in a note,
referring to coronavirus fears. 
    "In our opinion, this is currently a more likely scenario,
and the long end of the Polish curve should move towards the
2.20% barrier."
    
    
            CEE       SNAPSHO   AT                      
            MARKETS   T        1059              
                               CET               
                      CURRENC                           
                      IES                        
                      Latest   Previou  Daily    Change
                               s                 
                      bid      close    change   in 2020
 Czech      <EURCZK=  24.8650  24.8465   -0.07%   +2.28%
 crown      >                                    
 Hungary    <EURHUF=  338.800  340.000   +0.35%   -2.26%
 forint     >               0        0           
 Polish     <EURPLN=   4.2564   4.2521   -0.10%   +0.00%
 zloty      >                                    
 Romanian   <EURRON=   4.7650   4.7670   +0.04%   +0.49%
 leu        >                                    
 Croatian   <EURHRK=   7.4530   7.4570   +0.05%   -0.10%
 kuna       >                                    
 Serbian    <EURRSD=  117.480  117.570   +0.08%   +0.08%
 dinar      >               0        0           
 Note:      calculated from             1800            
 daily                                  CET      
 change                                          
                                                        
                      Latest   Previou  Daily    Change
                               s                 
                               close    change   in 2020
 Prague               1104.41  1102.94   +0.13%   -1.01%
                                    00           
 Budapest             44460.3  44482.4   -0.05%   -3.52%
                            0        0           
 Warsaw               2101.52  2126.31   -1.17%   -2.26%
 Bucharest            10037.3  10000.1   +0.37%   +0.60%
                            1        8           
 Ljubljana  <.SBITOP   981.83   983.22   -0.14%   +6.05%
            >                                    
 Zagreb               2026.25  2025.26   +0.05%   +0.44%
 Belgrade   <.BELEX1   811.49   809.70   +0.22%   +1.22%
            5>                                   
 Sofia                 569.32   568.67   +0.11%   +0.21%
                                                        
                      Yield    Yield    Spread   Daily
                      (bid)    change   vs Bund  change
                                                 in
 Czech                                           spread
 Republic                                        
   2-year   <CZ2YT=R   1.8060  -0.0100   +246bp    +0bps
            R>                                s  
   5-year   <CZ5YT=R   1.5960  -0.0780   +221bp    -6bps
            R>                                s  
   10-year  <CZ10YT=   1.5610   0.0000   +197bp    +3bps
            RR>                               s  
 Poland                                                 
   2-year   <PL2YT=R   1.5680  -0.0070   +222bp    +1bps
            R>                                s  
   5-year   <PL5YT=R   1.8310   0.0080   +244bp    +3bps
            R>                                s  
   10-year  <PL10YT=   2.1770   0.0150   +258bp    +5bps
            RR>                               s  
            FORWARD                                     
                      3x6      6x9      9x12     3M
                                                 interba
                                                 nk
 Czech Rep               2.37     2.31     2.24     2.39
            <PRIBOR=                             
            >                                    
 Hungary                 0.47     0.56     0.95     0.36
                                                 
 Poland                  1.73     1.71     1.69     1.71
                                                 
 Note: FRA  are for ask                                 
 quotes     prices                               
 **********************************************         
 ****************                                
 
    
    
    

 (Reporting by Alan Charlish in Warsaw, Ania Komuves, Gergely
Szakacs and Marton Dunai in Budapest, Luiza Ilie in Bucharest
and Jason Hovet in Prague; Editing by Subhranshu Sahu)
  
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