November 27, 2018 / 3:46 PM / 18 days ago

CEE MARKETS-Zloty outperforms as dollar strength weighs on forint, crown

    * Forint hits 4-week low due to dollar rise, in slow trade
    * Ukraine-Russia conflict, sentiment data weigh on crown

 (Adds zloty strengthening, new analyst comment, Hungary's
Treasury bill auction)
    By Sandor Peto and Alicja Ptak
    BUDAPEST/WARSAW, Nov 27 (Reuters) - The zloty set a six-week
high against the forint on Tuesday, extending gains as Poland's
tension with Brussels over the rule of law was seen easing,
while a firming dollar weighed on other Central European
currencies.
    The zloty started to firm last week as the government
reversed law changes concerning the Supreme Court that the
European Union had condemned.
    The zloty and Polish bank stocks have been also
recovering as worries eased that the banking system could get
harmed by a corruption scandal.
    Poland's anti-corruption agency detained the former head of
financial regulator KNF, Marek Chrzanowski, over corruption
allegations, which he had denied.
    "Two key local risks were normalised ...," said Mateusz
Sutowicz, financial market analyst at Bank Millennium.
    "But each following sessions brings smaller scale of zloty
appreciation. We expect that until the end of the month zloty
will remain around 4.29 (against the euro)," he added.
    The zloty traded at 4.2933 against the euro at
1549 GMT, up 0.1 percent.
    The forint, meanwhile, shed 0.35 percent, to trade
at 324.6.
    The two units' opposite movement versus the euro drove the
forint/zloty cross to 75.62, the forint's weakest
level since Oct. 12.
    The Czech crown also shed 0.2 percent against the
euro as dollar buying caused some forint and crown selling in
thin turnover, dealers said. 
    The weekend's naval conflict between Russia and Ukraine and
Monday's weak Czech consumer sentiment data for November also
weighed on the crown, Komercni Banka analysts said in a note.
    The Czech central bank, which increased interest rates at
each of its last four rate meetings, is not expected to hike
them further at its meeting on Dec. 20.
    "We don't expect the crown to strengthen in the remainder of
the year, that should come only in 2019," Komercni said.
    The forint stayed within the past six months' narrow ranges,
even though continuing robust consumption has led to some
decline in Hungary's trade surpluses in the past months,
somewhat weakening the forint's support.
    A global retreat in crude prices in the past weeks has also
soothed fears that inflation might reach the top of the central
bank's 2-4 percent target range without the bank changing its
loose policy stance, Budapest-based Erste analyst Orsolya Nyeste
said.
    Hungary's markets are awash with money, and the central bank
is unlikely to start tightening policy in the months ahead,
analysts said.
    The yield of Hungary's 3-month Treasury bills fell deeper
into the negative at an auction on Tuesday, to -0.11 percent
from -0.06 percent a week ago.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1549 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.9600   25.9070    -0.20%    -1.61%
 crown      >                                       
 Hungary    <EURHUF=  324.6000  323.4800    -0.35%    -4.22%
 forint     >                                       
 Polish     <EURPLN=    4.2933    4.2962    +0.07%    -2.72%
 zloty      >                                       
 Romanian   <EURRON=    4.6575    4.6600    +0.05%    +0.48%
 leu        >                                       
 Croatian   <EURHRK=    7.4250    7.4275    +0.03%    +0.07%
 kuna       >                                       
 Serbian    <EURRSD=  118.4000  118.3600    -0.03%    +0.08%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1062.50  1065.160    -0.25%    -1.45%
                                       0            
 Budapest             39586.96  39598.29    -0.03%    +0.53%
 Warsaw                2210.76   2213.57    -0.13%   -10.18%
 Bucharest             8564.28   8515.53    +0.57%   +10.45%
 Ljubljana  <.SBITOP    820.20    818.39    +0.22%    +1.71%
            >                                       
 Zagreb                1723.75   1736.35    -0.73%    -6.46%
 Belgrade   <.BELEX1    742.55    749.38    -0.91%    -2.27%
            5>                                      
 Sofia                  583.05    584.90    -0.32%   -13.93%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.7400    0.0970   +239bps    +11bps
            R>                                      
   5-year   <CZ5YT=R    1.8400   -0.0040   +208bps     +1bps
            R>                                      
   10-year  <CZ10YT=    2.0930    0.0080   +175bps     +3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5780   -0.0150   +223bps     +0bps
            R>                                      
   5-year   <PL5YT=R    2.4500    0.0090   +269bps     +3bps
            R>                                      
   10-year  <PL10YT=    3.1780   -0.0020   +283bps     +2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.18      2.28      2.35      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.29      0.51      0.80      0.13
                                                    
 Poland                   1.75      1.79      1.84      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
    

 (Reporting by Sandor Peto, Editing by Alison Williams)
  
 
 
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