September 3, 2018 / 10:31 AM / 23 days ago

CEE MARKETS-Zloty weakens; regional PMIs are mixed

    * Zloty weakens after Polish PMI comes in lowest in 22
months
    * Czech PMI slows, crown still gains
    * Romanian bond steady before auction

    By Sandor Peto
    BUDAPEST, Sept 3 (Reuters) - Central European currencies
were mixed on Monday after mixed reports on the region's
manufacturing with the Purchasing Managers' Index for Poland,
the region's biggest economy, dropping to its lowest in almost
two years.
    The drop to 51.4 in August from 52.9 in July, and the lowest
export orders in years, signal that Poland's economic growth
will slow in the second half of the year, BZ BWK analysts said
in a note.
    "We expect real data for August to confirm the weakening of
business activity the recent sentiment indices suggest," they
said.
    After the figures, the Polish central bank is unlikely to
give up its loose policy stance, which it retained even after
second-quarter output figures showed robust 5.1 percent growth. 
    The zloty weakened 0.1 percent against the euro by 0936 GMT,
to 4.298.
    A rebound in Turkey's lira helped the region's
currencies, after its weakness caused some jitters in the past
weeks in emerging markets.
    Accelerating inflation in the region, fuelled by a surge in
wages, has not worried Poland's central bank, unlike its Czech
counterpart, which has raised rates five times since August last
year and is expected to continue to increase them.
    The Czech PMI dropped to 54.9 in August from 55.4 in July --
below the 55.2 forecast, but still indicating healthy growth.
The Czech crown gained 0.1 percent to 25.75.
    Hungary's PMI jumped to 56.2 from 53.3. The Hungarian
central bank is expected to maintain its loose policy, although
its Sept. 18 meeting may provide some guidance about how it will
phase out its long-term interest rate swaps, BofA Merrill Lynch
analysts said in a poll.
    "We expect the central bank to be careful not to send any
signals about the start of policy normalisation for the
short-end, for fear of renewed HUF appreciation," they said,
adding that it would take 5 percent or more weakening in the
forint to make the bank worried over inflation.
    The currency was steady at 326.8 against the euro.
    Warsaw led a rise in most of the region's main equities
indices, gaining 1.1 percent.
    Regional government bond yields mostly tracked Bunds higher.
    Romania's three-year yield was bid steady at 4 percent
before an auction. A decline in Romania's inflation has
supported demand for its bonds at recent auctions. 
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1136 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.7500   25.7700    +0.08%    -0.81%
 crown      >                                       
 Hungary    <EURHUF=  326.8000  326.7000    -0.03%    -4.86%
 forint     >                                       
 Polish     <EURPLN=    4.2980    4.2945    -0.08%    -2.83%
 zloty      >                                       
 Romanian   <EURRON=    4.6380    4.6318    -0.13%    +0.90%
 leu        >                                       
 Croatian   <EURHRK=    7.4330    7.4385    +0.07%    -0.04%
 kuna       >                                       
 Serbian    <EURRSD=  117.9900  118.2500    +0.22%    +0.43%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1076.92  1072.880    +0.38%    -0.12%
                                       0            
 Budapest             37171.18  37233.40    -0.17%    -5.60%
 Warsaw                2362.49   2337.96    +1.05%    -4.01%
 Bucharest             8311.33   8274.54    +0.44%    +7.19%
 Ljubljana  <.SBITOP    866.17    861.53    +0.54%    +7.41%
            >                                       
 Zagreb                1818.08   1822.24    -0.23%    -1.35%
 Belgrade   <.BELEX1    734.09    736.98    -0.39%    -3.38%
            5>                                      
 Sofia                  632.44    631.83    +0.10%    -6.64%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.4870    0.2070   +210bps    +20bps
            R>                                      
   5-year   <CZ5YT=R    1.7020    0.0240   +198bps     +2bps
            R>                                      
   10-year  <CZ10YT=    2.1340    0.0330   +181bps     +4bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6090    0.0190   +222bps     +1bps
            R>                                      
   5-year   <PL5YT=R    2.5440    0.0210   +282bps     +2bps
            R>                                      
   10-year  <PL10YT=    3.2140    0.0300   +289bps     +3bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                1.84      1.96      2.05      1.50
            <PRIBOR=                                
            >                                       
 Hungary                  0.49      0.69      0.89      0.17
                                                    
 Poland                   1.76      1.79      1.83      1.71
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Reporting by Sandor Peto, editing by Larry King)
  
 
 
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