March 24, 2020 / 4:03 PM / 8 days ago

UPDATE 1-CEE MARKETS-Hungarian central bank injects liquidity, forint slips

 (Recasts with Hungarian central bank, forint)
    By Alan Charlish and Anita Komuves
    WARSAW/BUDAPEST, March 24 (Reuters) - The Hungarian forint
 weakened in late trade on Tuesday after the central
bank launched measures to boost liquidity and left rates on
hold, as the country's economy is pummelled by the coronavirus
outbreak.
    Central Europe's most dovish central bank had faced calls to
raise rates because of rising inflation, but the coronavirus has
changed the terms of the monetary policy debate, with
rate-setters around the world cutting the cost of borrowing.
    The Hungarian central bank left its benchmark rate unchanged
at 0.9% and decided to introduce a new fixed-rate collateralised
loan instrument with unlimited liquidity.
    It also cut its 2020 forecasts for gross domestic product
(GDP) growth to 2.0-3.0% from 3.7% and inflation to 2.6-2.8%
from 3.5%.
    The forint was down 1.21% against the euro at 356.62 at 1536
GMT, after having risen earlier in the day.
    The Polish zloty also gave up earlier gains,
falling 0.07% on the day to 4.6144. The Czech crown
was up 0.14% at 27.8000 and the Romanian leu gained
0.21% to 4.8399.
    Currencies and stocks had bounced in early trade after the
U.S. Federal Reserve rolled out extraordinary measures to
support the coronavirus-hit economy.
    On Monday, the Fed said it would back purchases of corporate
bonds, backstop direct loans to companies and expand its asset
purchases by as much as needed to stabilise financial markets.

    A Warsaw-based equity trader said all markets were
rebounding, mostly because of the Fed's decision.
    At 1536 GMT Warsaw's blue-chip WIG 20 index was up
3.19%, Prague's PX index was up 7.73% and Budapest's main
index was up 5.98%.
    On Monday, Poland's central bank repurchased bonds worth 5.6
billion zlotys, the second such operation in as many weeks, to
try to support the economy during the coronavirus
outbreak.   
    Polish benchmark 10-year bond yields were down almost 13
basis points at 1.7570%.
    Czech 10-year yields were down over 10 basis points at
1.5540%. 
  
    
            CEE        SNAPSHOT   AT                         
            MARKETS              1636 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2020
 Czech                  27.8000   27.8395    +0.14%    -8.52%
 crown                                               
 Hungary               356.6200  352.3200    -1.21%    -7.14%
 forint                                              
 Polish                  4.6144    4.6113    -0.07%    -7.76%
 zloty                                               
 Romanian                4.8399    4.8503    +0.21%    -1.07%
 leu                                                 
 Croatian                7.6140    7.6014    -0.17%    -2.21%
 kuna                                                
 Serbian               117.5200  117.5500    +0.03%    +0.04%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2020
 Prague                  795.32  738.2800    +7.73%   -28.71%
 Budapest              32691.94  30848.56    +5.98%   -29.06%
 Warsaw                 1450.30   1405.45    +3.19%   -32.55%
 Bucharest              7406.96   7038.95    +5.23%   -25.76%
 Ljubljana               706.27    685.52    +3.03%   -23.72%
 Zagreb                 1403.99   1364.98    +2.86%   -30.41%
 Belgrade   <.BELEX15    616.31    606.62    +1.60%   -23.12%
            >                                        
 Sofia                   418.88    406.90    +2.94%   -26.27%
                                                             
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.3440   -0.0110   +198bps     -7bps
            >                                        
   5-year   <CZ5YT=RR    1.4430   -0.1240   +195bps    -17bps
            >                                        
   10-year  <CZ10YT=R    1.5540   -0.1060   +188bps    -15bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    0.9330   -0.0020   +157bps     -6bps
            >                                        
   5-year   <PL5YT=RR    1.3040   -0.1180   +181bps    -16bps
            >                                        
   10-year  <PL10YT=R    1.7570   -0.1280   +209bps    -18bps
            R>                                       
            FORWARD                                          
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      0.72      0.34      0.31      1.76
            PRIBOR=>                                 
 Hungary            <      0.45      0.42      0.33      0.55
            BUBOR=>                                  
 Poland             <      0.51      0.40      0.37      1.18
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 **************************************************          
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 (Reporting by Alan Charlish in Warsaw and Anita Komuves in
Budapest; editing by Barbara Lewis)
  
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