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CEE MARKETS-Hungary's forint recovers, bond rally loses steam
September 26, 2017 / 10:14 AM / a month ago

CEE MARKETS-Hungary's forint recovers, bond rally loses steam

    * Forint is recovers from its lowest in five months
    * Hungarian debt rally loses steam as forint slumps
    * Hungary offers deal to replace dollar bonds with euro debt
    * Politics weigh on zloty, leu
    * Czech central bank may raise rates again

    By Sandor Peto
    BUDAPEST, Sept 26 (Reuters) - Hungary's forint regained some
ground on Tuesday but remains near five-month lows after the
country's central bank further loosened monetary policy last
week.
    The central bank has lowered its inflation forecasts, cut
interest rates, pledged liquidity-boosting measures and held a
foreign-exchange swap auction on Monday to provide banks with
forint liquidity.
    Those measures combined to cause the forint to fall on
Monday. The slide ended on Tuesday, with the currency
inching up 0.1 percent to 311.25 by 1003 GMT. A bond rally
petered out as the currency weakened.
     On Tuesday, the government held its first three-month
Treasury bill auction since the measures. The sale drew solid
demand, despite negative yields at Hungary's last bill auctions
.
    The Hungarian state debt agency on Tuesday also announced a
deal to buy back dollar-denominated bonds and replace them with
longer-dated euro bonds, days after a similar deal by Slovenia.
    With the forint's 310 resistance broken, 315 could be the
next target, but the euro has been overbought, Erste analysts
said in a note. "Thus testing back the 308-310 range is
possible, before the 315 level gets in reach," they said.
    In general, Central Europe's economic growth and subdued
inflation have help buoy its assets, although political risks
weigh on the zloty and the leu. Inflation has risen above
targets only in the Czech Republic.
    A Reuters poll showed most analysts expect the Czech central
bank to raise interest rates either at its meeting on Wednesday
or, more likely, in November. But a large number of
outstanding long positions is keeping investors cautious, and
the crown remains on the weak side of 26 to the euro.
    September inflation figures due in Poland on Friday will be
a key indicator of about regional inflation trends. The zloty
 eased slightly, after some jitters on Monday when
Polish President Andrzej Duda presented proposals for an
overhaul of the judiciary system.
    Earlier, he had vetoed government bills on the judiciary
reform, which had raised worries over the rule of law in Poland.
Duda's own proposals may maintain tension with the European
Union over the issue.
    The leu traded a shade weaker, at the 4.6
psychological line against the euro as the issue of corruption
kept Romanian politics boiling. The government has asked Deputy
Prime Minister Sevil Shhaideh and Rovana Plumb, the minister in
charge of European funds, not to resign despite corruption
charges.
    
               CEE MARKETS  SNAPSH   AT  1203 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.065  26.054  -0.04%   3.61%
                                 0       5          
 Hungary                    311.25  311.51   +0.08  -0.78%
 forint                         00      00       %  
 Polish zloty               4.2855  4.2806  -0.11%   2.76%
 Romanian leu               4.6000  4.5989  -0.02%  -1.41%
 Croatian                   7.4900  7.4835  -0.09%   0.87%
 kuna                                               
 Serbian                    119.35  119.30  -0.04%   3.35%
 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                     1043.8  1041.4   +0.22   +13.2
                                 2       9       %      6%
 Budapest                   38066.  38107.  -0.11%   +18.9
                                75      87              5%
 Warsaw                     2442.6  2453.1  -0.43%   +25.4
                                 1       5              0%
 Bucharest                  7927.9  7888.6   +0.50   +11.9
                                 4       4       %      0%
 Ljubljana                  803.12  802.66   +0.06   +11.9
                                                 %      2%
 Zagreb                     1820.0  1819.3   +0.04  -8.76%
                                 5       6       %  
 Belgrade                   722.59  724.02  -0.20%   +0.73
                                                         %
 Sofia                      686.30  680.87   +0.80   +17.0
                                                 %      3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.078   0.023   +078b   +3bps
                                                ps  
   5-year                    0.239   0.052   +055b   +5bps
                                                ps  
   10-year                   1.096   -0.01   +070b   -1bps
                                                ps  
 Poland                                                   
   2-year                    1.693   0.006   +240b   +2bps
                                                ps  
   5-year                    2.646   0.016   +295b   +2bps
                                                ps  
   10-year                   3.304   0.016   +290b   +2bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.73    0.85    0.94       0
               IBOR=>                               
 Hungary               <BU    0.07    0.08    0.12    0.04
               BOR=>                                
 Poland                <WI    1.77    1.81    1.87    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
    

 (Additional reporting from Warsaw, editing by Larry King)
  
 
 

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