November 29, 2017 / 11:05 AM / a year ago

CEE MARKETS-Zloty jumps on stop-loss deals, helped by strong economy

    * Zloty sails through 4.2 vs euro boosted by stop-loss deals
    * Recent robust economic figures continue to buoy zloty
    * Hungarian bonds retreat, foreigners' holding drops

    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Nov 29 (Reuters) - The zloty jumped to a
5-1/2 month high against the euro on Wednesday, boosted by
stop-loss deals at the key 4.2 level, while Central European
asset prices were mixed.
    The zloty, which along with the Czech crown, is the top
performing currency in the world this year, has been
appreciating for weeks.
    Poland's recent industrial output, wage and retail sales
figures have fuelled expectations that robust growth could tip
the balance in the central bank and lead it to hike interest
rates next year.
    In early trade, the zloty rallied to 4.186. By
1002 GMT it retreated to 4.199, still up 0.15 percent.
    "The chart suggest that the way to 4.16 is open," said BZ
WBK chief dealer Mateusz Bieniek, adding that fundamentals
backed the zloty, political risks were limited, and a dollar
firming could hurt it only if it is sudden.
    "Moreover, over the last 20 years, December has usually been
good for the zloty," he said.
    The index of Warsaw-listed bank stocks set a new
2-and-1/2-year high.
    Economic growth is strong across the region, but inflation
is not a concern everywhere.
    The Czech central bank has raised its interest rates twice
since August to fight inflation. Expectations for further hikes
keep the crown near 4-1/2 year highs against the euro.
    It firmed 0.1 percent to 25.47 on Wednesday and most
analysts expect further gains.
    Czech markets usually ignore politics. Election winner ANO's
party leader Andrej Babis said on Tuesday he expected his
minority cabinet to take power on Dec. 13.
    In Romania, concerns over judiciary reform, corruption and
tension between the government and the central bank remain in
the limelight, on top of worry over rising inflation.
    The bank has requested a meeting with Prime Minister Mihai
Tudose, just days after he criticized the bank for letting the
leu weaken to record lows. 
    The currency eased a shade on Wednesday, just like the 
forint which traded at 311.30.
    The latter is off seven-month lows touched a week ago when
the National Bank of Hungary announced new programmes to push
long-term interest rates lower.
    The announcement boosted demand at a Hungarian bond auction
last Thursday, also helping the forint.
    The latest government figures, however, showed that foreign
investors did not take part in the rally. Their Hungarian bond
holding actually dropped as yields were falling to
record lows.
    Hungarian yields rose 2-5 basis points on Wednesday,
steepening the curve. Ten-year papers traded at 2.12 percent, 22
basis points below U.S. Treasuries. 
               CEE MARKETS  SNAPSHOT  AT                  
                                        1102 CET          
                            Latest    Previous  Daily     Change
                            bid       close     change    in 2017
 Czech crown                25.4700   25.4910   +0.08%    6.03%
 Hungary                    311.3000  311.1350  -0.05%    -0.80%
 Polish zloty               4.1990    4.2051    +0.15%    4.88%
 Romanian leu               4.6419    4.6408    -0.02%    -2.30%
 Croatian                   7.5450    7.5325    -0.17%    0.13%
 Serbian                    119.3300  119.6450  +0.26%    3.37%
 Note: daily   calculated   previous  close at  1800 CET  
 change        from                                       
                            Latest    Previous  Daily     Change
                                      close     change    in 2017
 Prague                     1056.41   1053.85   +0.24%    +14.63%
 Budapest                   39020.97  39242.18  -0.56%    +21.93%
 Warsaw                     2473.42   2485.71   -0.49%    +26.98%
 Bucharest                  7810.27   7802.62   +0.10%    +10.24%
 Ljubljana                  779.80    780.54    -0.09%    +8.67%
 Zagreb                     1870.06   1865.47   +0.25%    -6.26%
 Belgrade                   735.41    739.42    -0.54%    +2.51%
 Sofia                      667.58    667.39    +0.03%    +13.84%
                            Yield     Yield     Spread    Daily
                            (bid)     change    vs Bund   change in
 Czech                                                    spread
 2-year                     0.26      0         +094bps   -1bps
 5-year                     0.904     0.039     +122bps   +1bps
 10-year                    1.642     -0.117    +128bps   -14bps
 2-year                     1.555     0.006     +224bps   -1bps
 5-year                     2.619     0.081     +293bps   +6bps
 10-year                    3.321     0.002     +296bps   -2bps
               FORWARD      RATE      AGREEMENT           
                            3x6       6x9       9x12      3M interbank
 Czech Rep             <PR  1.03      1.21      1.35      0
 Hungary               <BU  0.08      0.095     0.14      0.03
 Poland                <WI  1.773     1.83      1.93      1.73
 Note: FRA     are for ask                                
 quotes        prices                                     
 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Elaine Hardcastle)
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