April 4, 2019 / 9:35 AM / 3 months ago

CEE MARKETS-Zloty edges off multi-month high versus forint

    * No change in Polish central bank's rhetoric weakens zloty
    * Forint settles firmer at 320 vs euro, sell-off lost steam
    * CEE's most dovish two central banks see no change in
policy

    By Sandor Peto
    BUDAPEST, April 4 (Reuters) - The forint drifted further off
2-1/2 month lows against the zloty on Thursday after the Polish
central bank (NBP) said again late in the previous session that
it saw no need to change its record low interest rates for
years. 
     The forint had fallen to multi-month lows against both the
euro and its main Central European peer, the zloty
, after Hungary's central bank last week raised one of
its interest rates for the first time since 2011 but dropped its
hawkish bias.
     Poland and Hungary have Central Europe's lowest benchmark
interest rates at 1.5 and 0.9 percent, respectively, both record
low levels.
     While surging wages have helped push up inflation in the
region this year, softer rhetoric from the U.S. Federal Reserve
and the European Central Bank has reduced pressure on local
peers to tighten monetary policy.
     NBP Governor Adam Glapinski's comments on Wednesday were no
surprise as annual inflation, which rose to 1.7 percent in
March, is still near the bottom of the bank's 1.5-3.5 percent
target range.
    "Overall, the official rhetoric of the (Polish) MPC remains
dovish," Santander analysts said in a note.
    "... And even though some concerns about the fiscal easing
(pledged by the government) have begun to emerge, it is far too
early to change the monetary policy bias."
    The zloty eased 0.1 percent against the euro to
4.2952 by 0831 GMT, moving nearer the 4.3 line, which is also
its 200-day moving average.
    The forint was steady at around 320, seen as a key
resistance level.
    Some investors sold the zloty against the forint after
dissent from hawkish NBP policymakers over a government spending
rise did not lead to any change in the bank's stance, one
Budapest-based dealer said.
    The forint was bid around 74.5 versus the zloty,
off levels near 75 reached on Tuesday.  
    "Looking forward, inflation figures will be keenly watched
in the market in Hungary ... but sideways trading is the
likeliest scenario," the dealer said, noting that turnover in
currencies had returned to lower levels after a surge last week.
    Poland's 10-year government bonds traded around 2.9 percent,
a two-week high. The region's bond prices have given up part of
the strong gains of March, when worries over economic growth
pushed U.S., euro zone and Central European yields sharply down.
    A Reuters poll of analysts published on Tuesday projected a
rise in regional yields over the next 12 months as worries over
the world economy could ease, while governments in the region
could increase spending.   
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1031 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7150   25.7120    -0.01%    -0.03%
 crown      >                                       
 Hungary    <EURHUF=  320.0000  320.0500    +0.02%    +0.34%
 forint     >                                       
 Polish     <EURPLN=    4.2952    4.2891    -0.14%    -0.13%
 zloty      >                                       
 Romanian   <EURRON=    4.7540    4.7555    +0.03%    -2.10%
 leu        >                                       
 Croatian   <EURHRK=    7.4345    7.4295    -0.07%    -0.33%
 kuna       >                                       
 Serbian    <EURRSD=  117.8100  117.9500    +0.12%    +0.42%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1086.35  1086.690    -0.03%   +10.11%
                                       0            
 Budapest             42112.92  42193.97    -0.19%    +7.60%
 Warsaw                2406.55   2407.63    -0.04%    +5.71%
 Bucharest             8183.26   8156.05    +0.33%   +10.83%
 Ljubljana  <.SBITOP    870.15    870.41    -0.03%    +8.19%
            >                                       
 Zagreb                1797.15   1793.71    +0.19%    +2.76%
 Belgrade   <.BELEX1    730.39    732.31    -0.26%    -4.11%
            5>                                      
 Sofia                  582.30    581.90    +0.07%    -2.05%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8110   -0.1080   +239bps    -11bps
            R>                                      
   5-year   <CZ5YT=R    1.7870    0.0550   +224bps     +6bps
            R>                                      
   10-year  <CZ10YT=    1.8560   -0.0050   +186bps     -1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6960   -0.1120   +228bps    -12bps
            R>                                      
   5-year   <PL5YT=R    2.2540    0.0080   +270bps     +1bps
            R>                                      
   10-year  <PL10YT=    2.9050    0.0090   +291bps     +1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.14      2.18      2.17      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.33      0.47      0.60      0.18
                                                    
 Poland                   1.73      1.73      1.74      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Catherine Evans)
  
 
 
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