November 28, 2019 / 10:52 AM / 11 days ago

CEE MARKETS-Currencies slip as investors shun riskier assets

    By Krisztina  Than
    BUDAPEST, Nov 28 (Reuters) - The Hungarian forint slipped to
a record low against the euro and the Polish zloty also eased on
Thursday, amid renewed tensions between the U.S. and China over
protests in Hong Kong.
    The forint touched 337.21 versus the euro. The
Hungarian central bank's easy monetary policy, the loosest in
central Europe, makes the currency vulnerable when risk aversion
grows. 
    By 0947 GMT, the forint had gained to 336.70. It remains
down by 4.6% so far this year, the most in the region, and
analysts said decline could continue.
    "The forint's weakening has not accelerated ... but it
slowly keeps edging weaker," Erste said in a note. They said
this movement, based on a technical analysis, could take the
exchange rate to as low as 344.
    The National Bank of Hungary is sticking to its loose
policy, keeping its base rate at 0.9% and the overnight deposit
rate at minus 0.05% at its latest meeting. The NBH
has repeatedly said it has no exchange rate target. 
    The Czech crown weakened by 0.1% and the Polish
zloty by 0.2%.
    "The zloty has been under pressure for six consecutive days
and has reached our short-term target (4.31-4.32). We think that
now the exchange rate could stabilise before restarting the
upside move," Santander Bank Polska said in a note.
    The Czech central bank's governor repeated on Wednesday that
he still preferred rate stability, taking some shine off the
currency.
    The leu dropped to a record low of 4.8075 per euro
in after-hours trade late on Wednesday. It recovered early
Thursday to trade at 4.7905 at 0942 GMT.
    "We believe that the move was rather too sudden and a
correction towards 4.7900 could occur today," ING Bank Romania
said in a note. "There is, however, limited scope for a
meaningful downside move."
    Investors are worried about Romania's swelling budget
deficit, which is above the European Union's ceiling of 3% of
gross domestic product, after big wage and pension increases.
    Romania's 2020 budget plan will probably be built around a
consolidated deficit target of about 3.5% of GDP, Finance
Minister Florin Citu said on Wednesday.
    A planned 2019 budget revision will raise this year's
deficit target to 4.3% of GDP from an initial target of 2.8%,
after the government collected less tax than expected.

            CEE        SNAPSHOT   AT                         
            MARKETS              1042 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.5670   25.5460    -0.08%    +0.55%
 crown                                               
 Hungary               336.7000  336.3000    -0.12%    -4.64%
 forint                                              
 Polish                  4.3185    4.3095    -0.21%    -0.67%
 zloty                                               
 Romanian                4.7905    4.8010    +0.22%    -2.85%
 leu                                                 
 Croatian                7.4368    7.4362    -0.01%    -0.36%
 kuna                                                
 Serbian               117.5100  117.5600    +0.04%    +0.67%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1087.90  1085.450    +0.23%   +10.27%
                                        0            
 Budapest              43608.64  43599.69    +0.02%   +11.42%
 Warsaw                 2164.21   2181.33    -0.78%    -4.94%
 Bucharest              9863.53   9875.75    -0.12%   +33.59%
 Ljubljana               893.66    896.33    -0.30%   +11.12%
 Zagreb                 1991.58   1991.53    +0.00%   +13.88%
 Belgrade   <.BELEX15    769.54    767.13    +0.31%    +1.03%
            >                                        
 Sofia                   543.98    543.98    +0.00%    -8.49%
                       BONDS                                 
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.4330   -0.0370   +207bps     -4bps
            >                                        
   5-year   <CZ5YT=RR    1.2100   -0.0220   +182bps     -1bps
            >                                        
   10-year  <CZ10YT=R    1.4560   -0.0300   +183bps     -2bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.3590   -0.0170   +199bps     -2bps
            >                                        
   5-year   <PL5YT=RR    1.7350   -0.0060   +235bps     +0bps
            >                                        
   10-year  <PL10YT=R    1.9860    0.0330   +236bps     +4bps
            R>                                       
            FORWARD    RATE      AGREEMEN                    
                                 T                   
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      2.23      2.22      2.16      2.18
            PRIBOR=>                                 
 Hungary            <      0.23      0.25      0.28      0.17
            BUBOR=>                                  
 Poland             <      1.72      1.69      1.66      1.71
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 **************************************************          
 ************                                        
 

 (Reporting by Krisztina Than, Luiza Ilie in Bucharest, Alan
Charlish in Warsaw and Jason Hovet in Prague; editing by Larry
King)
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