January 23, 2020 / 11:05 AM / a month ago

CEE MARKETS-Hungarian forint hits fresh record low against euro

    WARSAW, Jan 23 (Reuters) - The Hungarian forint
touched a new record low against the euro on Thursday, with
central European currencies taking a hit from worsening risk
sentiment due to rising fears over the spread of a new flu-like
virus that started in China.
    The forint was the region's worst performing currency in
2019 and has shed a further 1.7% so far in 2020. Hungary's
ultra-dovish central bank is not expected to take any action on
interest rates at a policy meeting next week.
    The forint firmed near the 334 mark on Monday, when the
central bank unexpectedly rejected all bids at a weekly FX swap
tender, a move that curbed the banking sector's liquidity by 38
billion forints. But the impact has been short-lived.
    At 1011 GMT, the forint was bid at 336.80 against the euro,
down 0.1% on Thursday, after touching a record low of 337.55
earlier in the session.
    "It is hard to imagine that in the long-run the central bank
will manage the exchange rate with this EUR/HUF swap tender in
the 330-335 range," a Budapest-based currency dealer said.
   "The move to reject bids at Monday's tender helped the forint
firm near the 334 mark, but it could not firm past that level.
It remains to be seen what the central bank does at next
Monday's tender and at Tuesday's rate meeting."
    All 18 analysts surveyed in a Reuters poll said Hungary's
base rate would remain at 0.9%, with inflation set
to retreat slowly from December's seven-year highs and economic
growth to lose steam in coming years.
    The Czech crown, which has already scaled
seven-year highs this year, was down 0.1% against the euro at
25.167, while the Polish zloty fell 0.1% to 4.246. The
Romanian leu was stable.
    Bond yields fell in line with core-market peers as investors
looked for safety amid fears around the coronavirus outbreak and
awaited a meeting of the European Central Bank, which is set to
launch a broad policy review that is likely to redefine its
inflation goal.
    At 0952 GMT, benchmark Polish 10-year yields
were down just over 1 basis point at 2.257% and Czech ten-year
yields fell over 5 basis points to 1.683%.
    The yield on Czech bonds due 2033
has dropped over 20 basis points in the past two days, which a
trader attributed to speculations that it could be added to a
JPMorgan emerging markets bond index.
    Central European stocks were mixed, with Warsaw's WIG 20
index rising 0.3%. Prague's PX index touched its
highest level since August 2011 before giving up its gains to
turn negative on the day. 
    London- and Prague-listed antivirus software company Avast
 has been the PX index's biggest gainer this
year with a 16% rise, but was down 1.2% by mid-morning.
  
 
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1111              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  25.1670  25.1405   -0.11%   +1.05%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  336.800  336.420   -0.11%   -1.68%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.2460   4.2407   -0.12%   +0.24%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.7790   4.7788   -0.00%   +0.19%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.4455   7.4375   -0.11%   -0.00%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.520  117.550   +0.03%   +0.04%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2020
 .PX     Prague             1139.90  1140.48   -0.05%   +2.18%
                                          00           
 .BUX    Budapest           44508.9  44597.0   -0.20%   -3.42%
                                  1        5           
 .WIG20  Warsaw    <.WIG20  2150.04  2146.56   +0.16%   -0.00%
                   >                                   
 .BETI   Buchares           10210.1  10131.7   +0.77%   +2.33%
         t                        9        7           
 .SBITO  Ljubljan  <.SBITO   965.91   967.78   -0.19%   +4.33%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  2056.02  2051.37   +0.23%   +1.91%
                   >                                   
 .BELEX  Belgrade  <.BELEX   794.30   803.45   -1.14%   -0.92%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   583.86   584.90   -0.18%   +2.77%
                   >                                   
                                                              
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   1.7350  -0.0160   +233bp    -1bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.6160  -0.0590   +216bp    -6bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.6790  -0.0560   +196bp    -4bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   1.5420  -0.0290   +213bp    -3bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.9380  -0.0120   +248bp    -1bps
 RR                RR>                              s  
 PL10YT            <PL10YT   2.2620  -0.0080   +254bp    +1bps
 =RR     10-year   =RR>                             s  
                   FORWARD                                    
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     2.23     2.22     2.19     2.17
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.35     0.48     0.60     0.19
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     1.75     1.77     1.79     1.71
                   ><WIBOR                             
                   =>                                  
         Note:     are for ask                                
         FRA       prices                              
         quotes                                        
         ********************************************         
         ******************                            
                                                              
 

 (Reporting by Alan Charlish in Warsaw, Gergely Szakacs in
Budapest and Jason Hovet in Prague; Editing by Shinjini Ganguli)
  
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