April 16, 2019 / 10:40 AM / 2 months ago

CEE MARKETS-Forint rebounds, boosted by rise in debt yields

    * Forint briefly firms through 100-day moving average
    * Bond yields pause after rise in Budapest, fall in Warsaw

    By Sandor Peto
    BUDAPEST, April 16 (Reuters) - The forint hit a 3-week high
against the euro on Tuesday, rebounding from falls last week
caused by data showing a jump in annual inflation in March.
    A recent surge in Hungarian government bond yields, partly
driven by a rise in Bund yields, has made the papers more
attractive - even though that rise stalled on Tuesday. "That
(yield rise) may be helping the forint too," one Budapest-based
dealer said. 
    At a weekly fx swap auction on Monday, the NBH continued to
cut forint liquidity provided to banks, but the closely watched
3-month interbank BUBOR rate stayed at 0.16 percent, below the
NBH's short-term target at 0.23 percent, another dealer said.
    The forint strengthened to break through 320
against the euro and briefly firmed further through its 100-day
moving average of 319.5.
    It retreated to 319.91 by 0921 GMT, still firmer by 0.1
percent on the day, while its Central European peers eased
slightly.
    The zloty shed less than 0.1 percent, after the
Polish finance ministry projected a slowdown in economic growth
to 3.3 percent by 2022 from about 4 percent this year.

    The yield on Hungary's 10-year government bond yield dropped
1 basis point to 3.24 percent, off Monday's 4-month highs
reached after a 40 basis point rise in three weeks.
    Its spread over Poland's corresponding yield,
which traded flat at 2.87 percent, stayed near Monday's 5-week
highs.
    Polish bond yields took a breather after a decline on Monday
which brought the spread of the 10-year yield over the
corresponding Bund to a 4-week low at 282 basis points.
    The fall followed an announcement from the government, which
is gearing up for elections late this year, of changes in the
pension system next year, including transferring all
state-guaranteed private pension funds to individual retirement
accounts.
    Along with tax changes, the measures reduce the risk that
Poland's budget deficit will breach the European Union's
ceiling, 3 percent of economic output, next year, Santander
analysts said in a note.
    The region's equities markets were mixed and rangebound.
    Budapest's main index rose, driven by a 2.6 percent 
jump in the shares of pharmaceuticals Richter, after
JP Morgan raised its price target for the share. 
    Prague's index was knocked down by a 4.3 percent
fall in the shares of Komercni Banka which started
trading without a dividend sheet.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1121 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6450   25.6360    -0.04%    +0.24%
 crown      >                                       
 Hungary    <EURHUF=  319.9100  320.1500    +0.08%    +0.37%
 forint     >                                       
 Polish     <EURPLN=    4.2747    4.2718    -0.07%    +0.35%
 zloty      >                                       
 Romanian   <EURRON=    4.7595    4.7586    -0.02%    -2.22%
 leu        >                                       
 Croatian   <EURHRK=    7.4370    7.4360    -0.01%    -0.36%
 kuna       >                                       
 Serbian    <EURRSD=  118.0000  117.9300    -0.06%    +0.25%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1093.37  1103.020    -0.87%   +10.83%
                                       0            
 Budapest             42928.59  42815.92    +0.26%    +9.68%
 Warsaw                2364.36   2358.19    +0.26%    +3.85%
 Bucharest             8243.09   8271.75    -0.35%   +11.64%
 Ljubljana  <.SBITOP    877.77    882.58    -0.54%    +9.14%
            >                                       
 Zagreb                1806.55   1817.12    -0.58%    +3.30%
 Belgrade   <.BELEX1    741.07    740.59    +0.06%    -2.71%
            5>                                      
 Sofia                  576.66    575.43    +0.21%    -2.99%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6820   -0.1460   +227bps    -14bps
            R>                                      
   5-year   <CZ5YT=R    1.7010    0.0200   +208bps     +2bps
            R>                                      
   10-year  <CZ10YT=    1.8650    0.0170   +181bps     +2bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6090   -0.0180   +220bps     -1bps
            R>                                      
   5-year   <PL5YT=R    2.2120   -0.0050   +259bps     +0bps
            R>                                      
   10-year  <PL10YT=    2.8870   -0.0060   +283bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.16      2.20      2.20      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.36      0.53      0.73      0.16
                                                    
 Poland                   1.74      1.74      1.75      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
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 (Additional reporting by Alicja Ptak in Warsaw)
  
 
 
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