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CEE MARKETS-Forint retains easing bias as markets eye monetary easing next week
September 14, 2017 / 9:35 AM / 11 days ago

CEE MARKETS-Forint retains easing bias as markets eye monetary easing next week

    By Krisztina  Than
    BUDAPEST, Sept 14 (Reuters) - The forint retained its
weakening bias on Thursday, on growing market expectations that
the Hungarian central bank could loosen monetary conditions
further at its meeting next week in the absence of significant
inflationary pressures.
    Central Europe's most dovish central bank (NBH), which has
kept its easing bias even as the Czech central bank starts
hiking interest rates, has said it is ready to loosen policy
with unconventional tools.
    The forint, which has been easing all this week,
was trading at 308.40 to the euro at 0839 GMT, down 0.1 percent.
Other currencies in the region were flat.
    "The forint is slowly drifting to the direction which the
central bank probably wants to see," one Budapest-based dealer
said. "The central bank is very relaxed concerning inflation."
    He added that markets were widely expecting the bank to
announce further steps to ease monetary conditions on Sept. 19.
    Some analysts said the bank could even surprise markets with
a more significant easing than anticipated. 
    While the central bank has said it would keep its main base
rate unchanged at a record-low 0.9 percent, some
investors expect a cut in its overnight deposit rate further
into negative territory from -0.05 percent.
    "Next week's central bank meeting could bring a surprise,
and we could see stronger than expected monetary easing," Monika
Kiss, analyst at brokerage Equilor, said in a note.
    Negative yields at two consecutive three-month treasury bill
auctions in the past 10 days also signalled that investors were
betting on a further easing measure.  
    In the Czech Republic, central bank board member Vojtech
Benda added to the voices signalling another interest rate hike
is coming this year, telling Reuters on Wednesday he could
imagine voting for a rate hike in September or November.

    "(He is) making up a set of three firm hawks in the voting
board, plus the governor who seems to be inclined for November,"
Komercni Banka trader Dalimil Vyskovsky said.
    The Czechs stepped ahead of others in the European Union by
delivering a rate hike in August, its first in almost a decade.
    The crown showed little reaction, having lost momentum to
push firmer beyond the 26 to the euro level, largely due to an
overhang of crown positions in the market that had been built up
before the central bank abandoned a currency cap in April.
    Czech bond yields were bid a touch higher.
               CEE MARKETS  SNAPSH   AT  1040 CET          
                            OT                      
                            CURRENCIES                     
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in 2017
 Czech crown                26.100  26.103   +0.01    3.48%
                                 0       5       %  
 Hungary                    308.40  308.17  -0.07%    0.14%
 forint                         00      50          
 Polish zloty               4.2834  4.2835   +0.00    2.81%
                                                 %  
 Romanian leu               4.6012  4.6000  -0.03%   -1.44%
 Croatian                   7.4795  7.4695  -0.13%    1.01%
 kuna                                               
 Serbian                    118.84  119.01   +0.14    3.80%
 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                     1047.8  1044.3   +0.33   +13.69
                                 2       3       %        %
 Budapest                   38261.  38119.   +0.37   +19.56
                                62      09       %        %
 Warsaw                     2504.8  2500.1   +0.19   +28.59
                                 3       6       %        %
 Bucharest                  8061.3  8040.0   +0.26   +13.78
                                 4       6       %        %
 Ljubljana                  802.02  795.69   +0.80   +11.77
                                                 %        %
 Zagreb                     1838.0  1842.8  -0.26%   -7.86%
                                 6       0          
 Belgrade                   727.49  728.96  -0.20%   +1.41%
 Sofia                      689.95  689.74   +0.03   +17.65
                                                 %        %
                            BONDS                          
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.038  -0.038   +068b    -3bps
                                                ps  
   5-year                    0.043  -0.022   +037b    -2bps
                                                ps  
   10-year                   0.964  -0.021   +056b    -2bps
                                                ps  
 Poland                                                    
   2-year                    1.697  -0.011   +241b    -1bps
                                                ps  
   5-year                    2.564  -0.019   +289b    -1bps
                                                ps  
   10-year                   3.217  -0.004   +282b    +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT              
                            3x6     6x9     9x12    3M
                                                    interba
                                                    nk
 Czech Rep             <PR    0.72    0.85    0.96        0
               IBOR=>                               
 Hungary               <BU    0.11    0.12   0.145     0.13
               BOR=>                                
 Poland                <WI   1.755   1.779   1.808     1.73
               BOR=>                                
 Note: FRA     are for ask                                 
 quotes        prices                               
 **********************************************************
 ****
 
    

 (Reporting by Reuters bureaux; Writing by Krisztina Than;
Editing by Catherine Evans)
  
 
 

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