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Jason Hovet

Reality check: Dip in growth has Czechs pinching pennies after splurge

15 Apr 2019

PRAGUE A year after embarking on a record spending splurge, the Czech Republic, one of the European Union's star fiscal performers, is falling back into deficit and has started tightening its belt to prevent an economic slowdown from wrecking its budget.

UPDATE 1-Czech central banker denies actions at turn of 2018/19 to stabilise crown

08 Mar 2019

PRAGUE, March 8 The Czech National Bank (CNB) on Friday denied speculation that it might have acted through its foreign counterparts to limit crown weakening at the end of last year.

Online boom delivers big returns for central European warehouses

05 Mar 2019

PRAGUE Online retailers racing to build warehouses in central Europe are propelling the region's real estate market to new heights and Asian investors on the hunt for higher yields are getting in on the act.

Czech telecoms regulator to launch 5G auction bidding in November

27 Feb 2019

PRAGUE, Feb 27 The Czech telecoms regulator CTU aims to launch an auction of next-generation 5G frequencies in early November, seeking to attract a fourth new operator to boost competition in a market among the most expensive for customers in Europe.

CEE MARKETS-Crown leads fx rise as Czechs add to upside CPI surprises

13 Feb 2019

* Crown firms after Jan CPI comes in at 2.5 pct vs 2.2 pct fcast * Core inflation rise continues to buoy the forint * Zloty steady after higher-than-expected C/A deficit (Adds Czech central bank and analyst comments, Polish data) By Sandor Peto and Jason Hovet BUDAPEST/PRAGUE, Feb 13 The crown led Central European currencies higher on Wednesday after Czech annual inflation came in well above forecasts, adding to upside surprises in consumer price indexes the region. Czech annual inflation jumped to 2.5 percent in January from two percent in December, well above a 2.2 percent forecast, and analysts said a rise in energy bills early this year could maintain upside inflation pressure. The Czech central bank (CNB) said the figure, pushed above its forecast by higher core inflation and an early pick-up in food prices, represented a risk of higher inflation going forward. The Czech crown firmed by 0.2 percent against the euro to 25.81, while the forint and the leu gained 0.1 percent. The units ignored a firming of the dollar which in the past year often caused currency selling in emerging markets, and a warning from CNB Vice-Governor Tomas Nidetzky that the Czech economy would get a hit if Britain were to leave the European Union without a deal. But the crown remained weaker than the 25.6 average rate projected by the CNB for the first quarter. The bank kept interest rates on hold at its meeting last week, remaining open to further hikes. CNB Governor Jiri Rusnok said after the decision that a rate hike would not have certainly strengthened the crown. Czech government bond yields rose after the inflation data. The 10-year yield rose by four basis points to 1.72 percent, compared with a six basis point drop in the corresponding Hungarian yield to 2.69 percent. "We continue to forecast one interest rate hike this year in Q3, but today's print skews the risks to our forecast towards earlier and potentially more rate hikes," Goldman Sachs analysts Kevin Daly and Timon Dreyer said in a note. "While Czech rates have risen at the front end by close to 10bp today, the market is still pricing in less than a full rate hike for this year and close to a full rate cut for next year," they said, adding that market-implied rates remained too low. Elsewhere, the forint got a boost already on Tuesday, after Hungary's tax-adjusted annual core inflation reached 3 percent, the threshold that central bank deputy governor Marton Nagy said last month would be a signal that the bank needs to start monetary tightening. Romanian figures released on Wednesday showed that annual inflation was flat at 3.3 percent. That was a tad above analysts' expectations, but it is unlikely to trigger action from the Romanian central bank which is deeply engaged in a row with the government over a new tax on banks' assets tied to interbank interest rates. The zloty was steady after December Polish data showed a higher-than-expected 1.4 billion euro current account deficit. CEE SNAPSHOT AT MARKETS 1501 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.8100 25.8670 +0.22% -0.40% crown > Hungary <EURHUF= 318.2200 318.5500 +0.10% +0.90% forint > Polish <EURPLN= 4.3300 4.3295 -0.01% -0.93% zloty > Romanian <EURRON= 4.7425 4.7481 +0.12% -1.87% leu > Croatian <EURHRK= 7.4031 7.4075 +0.06% +0.09% kuna > Serbian <EURRSD= 118.0400 118.1200 +0.07% +0.22% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1061.41 1057.320 +0.39% +7.59% 0 Budapest 40150.77 40488.09 -0.83% +2.59% Warsaw 2347.90 2370.99 -0.97% +3.13% Bucharest 7616.83 7523.83 +1.24% +3.16% Ljubljana <.SBITOP 831.34 833.24 -0.23% +3.37% > Zagreb 1754.45 1750.00 +0.25% +0.32% Belgrade <.BELEX1 702.19 707.54 -0.76% -7.81% 5> Sofia 573.22 573.32 -0.02% -3.57% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8270 0.0790 +238bps +7bps R> 5-year <CZ5YT=R 1.6790 0.0770 +204bps +7bps R> 10-year <CZ10YT= 1.7530 0.0430 +161bps +3bps RR> Poland 2-year <PL2YT=R 1.5460 -0.1090 +210bps -12bps R> 5-year <PL5YT=R 2.1910 0.0010 +255bps -1bps R> 10-year <PL10YT= 2.7220 -0.0080 +258bps -2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.08 2.11 2.13 1.99 <PRIBOR= > Hungary 0.38 0.59 0.80 0.15 Poland 1.74 1.73 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Andrew Cawthorne, William Maclean)

CEE MARKETS-Currencies firm as Czechs add to upside CPI surprises

13 Feb 2019

* Crown firms after Jan CPI comes in at 2.5 pct vs 2.2 pct fcast * Core inflation rise also continues to buoy the forint * ECB says Romania's bank tax is a financial stability risk By Sandor Peto and Jason Hovet BUDAPEST/PRAGUE, Feb 13 Upside surprises in January inflation figures drove Central European currencies higher on Wednesday, after Czech annual inflation came in well above forecasts. The forint firmed 0.3 percent and the Czech crown 0.2 percent against the euro by 0929 GMT, while the leu and the zloty also gained some ground. Weak economic figures from the euro zone and the region put some pressure on regional currencies in past weeks, but they regained some ground this week, helped by local inflation data. Czech annual inflation jumped to 2.5 percent in January from 2 percent in December, well above a 2.2 percent forecast, and analysts said a rise in energy bills early this year could maintain upside inflation pressure. "The fact that inflation growth was pulled by the majority of basket items will certainly not escape the attention of the hawkish wing of the bank board," said Radomir Jac, chief economist, Generali Investments CEE. "The combination of higher inflation and a weaker crown will mean debate on hiking interest rates will stay on the table," he said. "I believe the CNB will leave rates unchanged in March, but a serious debate on a hike could be on the agenda at the beginning of May." Czech government bond yields rose. The 10-year yield rose by 2 basis points at 1.7 percent, compared with a 2 basis point drop in the corresponding Polish yield to 2.7 percent. The forint got a boost already on Tuesday, after Hungary's tax-adjusted annual core inflation reached 3 percent. That is the mid-point of the central bank target range and the threshold that central bank deputy governor Marton Nagy said last month would be a signal that the bank needs to start monetary tightening. Romanian figures released on Wednesday showed that annual inflation was flat at 3.3 percent. That was a tad above analysts' expectations, but it is unlikely to trigger action from the Romanian central bank which is deeply engaged in a row with the government over a new tax on banks' assets tied to interbank interest rates. The European Central Bank criticized the government over the tax on Wednesday, saying that it could have a material impact on financial stability. A new tax on telecoms companies may lead to price increases by them, which is a risk, but inflation could stay inside the central bank's 1.5-3.5 percent target range this year, Erste analyst Dorina Ilasco said in a note. Romanian government bond yields were mostly steady after jitters since the government announced its 2019 tax plans in December as part of a budget based on economic growth assumptions that critics said were unrealistic. CEE SNAPSHOT AT MARKETS 1029 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.8150 25.8670 +0.20% -0.42% crown > Hungary <EURHUF= 317.7000 318.5500 +0.27% +1.07% forint > Polish <EURPLN= 4.3283 4.3295 +0.03% -0.89% zloty > Romanian <EURRON= 4.7435 4.7481 +0.10% -1.89% leu > Croatian <EURHRK= 7.4030 7.4075 +0.06% +0.09% kuna > Serbian <EURRSD= 118.0500 118.1200 +0.06% +0.21% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1058.57 1057.320 +0.12% +7.30% 0 Budapest 40297.86 40488.09 -0.47% +2.96% Warsaw 2364.99 2370.99 -0.25% +3.88% Bucharest 7579.42 7523.83 +0.74% +2.65% Ljubljana <.SBITOP 827.57 833.24 -0.68% +2.90% > Zagreb 1753.49 1750.00 +0.20% +0.27% Belgrade <.BELEX1 707.98 707.54 +0.06% -7.05% 5> Sofia 572.66 573.32 -0.12% -3.67% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.7770 0.0280 +234bps +2bps R> 5-year <CZ5YT=R 1.6720 0.0700 +205bps +7bps R> 10-year <CZ10YT= 1.7530 0.0430 +163bps +5bps RR> Poland 2-year <PL2YT=R 1.5500 -0.1050 +212bps -11bps R> 5-year <PL5YT=R 2.1750 -0.0150 +255bps -1bps R> 10-year <PL10YT= 2.7190 -0.0110 +259bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.08 2.11 2.13 1.99 <PRIBOR= > Hungary 0.37 0.58 0.79 0.15 Poland 1.74 1.73 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Andrew Cawthorne)

UPDATE 2-Czech lender MONETA to give shareholders more say in merger

06 Feb 2019

PRAGUE, Feb 6 MONETA Money Bank aims to let its shareholders participate in a share issue to finance its takeover of Air Bank, its chief executive said, as the lender seeks investor backing for one of the biggest deals in Czech banking in years.

CEE MARKETS-Zloty leads fx gains on Fed, crown gives up ground

31 Jan 2019

* Zloty hits 5-month high vs euro, off 8-month low vs forint * Hungarian bond sale robustly bid, yield approaches Polish level * Crown retreats after firming, CNB rate hikes is uncertain * Less hawkish Fed helps leu drift further away from record lows (Recasts with Hungarian auctions, surge of zloty and leu, new analyst comments) By Sandor Peto and Jason Hovet BUDAPEST/PRAGUE, Jan 31 Central European markets firmed across the board on Thursday, with the zloty leading a rise of currencies, after the Federal Reserve signalled that its interest rate hike cycle may have ended. The prospect of lower than expected U.S. interest rates made risky assets more attractive. The zloty jumped 0.65 percent to 4.2609 against the euro by 1439 GMT, after touching 5-month highs on the firm side of the 4.26 line. In the past weeks it underperformed its regional peer, the forint, which got a boost from hawkish central bank comments. Against the forint the zloty rebounded from Wednesday's 8-month lows. The forint initially rose versus the euro to its strongest levels since May, but then gave up ground. Hungarian bonds drew robust demand at an auction and a top-up tender. The government sold almost 100 billion forints ($363.24 million) worth of papers, almost twice its initial offer. The yield on Hungary's 10-year government bonds was fixed lower by 10 basis points at 2.74 percent, almost closing a gap with Poland's corresponding yield, even though the latter tested 2-and-1/2-yer lows, shedding 5 basis points to 2.72 percent. The crown gave up part of its initial gains. At 25.75 against the euro, it was still firmer by 0.2 percent from Wednesday. Czech central bank Governor Jiri Rusnok said on Czech television late on Wednesday that the bank could deliver between zero and two interest rate hikes this year. One Prague-based dealer said the crown was choppy hit by the latest comments from rate setters. "At the beginning of the year it was sure (of a rate hike)," the dealer said. "Now it is different. Nobody on the market is 100 percent persuaded of what will happen." The European Central Bank's policy course has a bigger, even though limited, impact on the CNB than the Fed, Patria Finance analyst Jan Bures said. "For now I believe the external risks connected with much weaker German figures and Brexit are more important factors that should make even the CNB to take a break in the hiking cycle for a while," he added. The leu surged 0.6 percent to 4.7219 versus the euro, drifting further away from record lows hit last week in response to worries over the Romanian government's new tax on banks. "There has been a bit of panic over the past days and now it seems that some foreign players have begun ... to throw back some euros into the market ... but nobody can estimate how long will it last," said a dealer with a foreign bank in Bucharest. CEE SNAPSHOT AT MARKETS 1539 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7500 25.7900 +0.16% -0.17% crown > Hungary <EURHUF= 316.2300 315.9700 -0.08% +1.54% forint > Polish <EURPLN= 4.2609 4.2884 +0.65% +0.67% zloty > Romanian <EURRON= 4.7219 4.7505 +0.61% -1.44% leu > Croatian <EURHRK= 7.4210 7.4220 +0.01% -0.15% kuna > Serbian <EURRSD= 118.4600 118.4500 -0.01% -0.14% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1040.75 1034.950 +0.56% +5.49% 0 Budapest 41034.89 40862.97 +0.42% +4.84% Warsaw 2364.87 2357.79 +0.30% +3.88% Bucharest 7028.22 7043.64 -0.22% -4.81% Ljubljana <.SBITOP 832.65 840.38 -0.92% +3.53% > Zagreb 1766.93 1762.17 +0.27% +1.04% Belgrade <.BELEX1 714.63 699.87 +2.11% -6.18% 5> Sofia 585.38 575.27 +1.76% -1.53% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.7210 -0.0090 +228bps -1bps R> 5-year <CZ5YT=R 1.5700 -0.1190 +191bps -11bps R> 10-year <CZ10YT= 1.7020 -0.0820 +154bps -6bps RR> Poland 2-year <PL2YT=R 1.4880 -0.0130 +205bps -1bps R> 5-year <PL5YT=R 2.1380 -0.0370 +248bps -2bps R> 10-year <PL10YT= 2.7400 -0.0310 +258bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.07 2.11 2.13 1.99 <PRIBOR= > Hungary 0.33 0.58 0.79 0.15 Poland 1.72 1.71 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 275.3000 forints) (Additional reporting by Radu Marinas in Bucharest, Editing by Jane Merriman and Ed Osmond)

CEE MARKETS-Markets jump on Fed comments, Czech crown gives up gains

31 Jan 2019

By Sandor Peto and Jason Hovet BUDAPEST/PRAGUE, Jan 31 Central European markets firmed across the board after the Federal Reserve signalled that its interest rate hike cycle may have ended. The prospect of lower than expected U.S. interest rates made risky assets more attractive and also caused some selling of the dollar whose strength weighed on financial assets in emerging markets last year. The forint hit its strongest levels since May last year at 315.03 against the euro in overnight international trade. The forint retreated to 315.85 by 0919 GMT as the euro gave up ground against the dollar, still slightly firmer from Tuesday's domestic close before the Fed's comments. The zloty touched a 5-week high at 4.2788 against the euro, before retreating to 4.2804, still up by 0.2 percent. The leu drifted further away from record lows hit last week in response to worries over the government's new tax on banks. It traded at 4.738, up a quarter of a percent. "There has been a bit of panic over the past days and now it seems that some foreign players have begun ... to throw back some euros into the market ... but nobody can estimate how long will it last," said a dealer with a foreign bank in Bucharest. Another trader said trading volumes were "pretty large". The Czech crown jumped in early trade from a one-month low set on Tuesday, but soon gave up most of its gain, to trade at 25.777. Czech central bank Governor Jiri Rusnok said on Czech television late on Wednesday that the bank could deliver between zero and two interest rate hikes this year. One Prague-based dealer said the crown was choppy because the latest comments from Czech central bankers left the market unsure about the rate hikes priced in earlier. "At the beginning of the year it was sure (of a rate hike)," the dealer said. "Now it is different. Nobody on the market is 100 percent persuaded of what will happen." In the region's equity markets, Bucharest led a rise, with its bluechip index gaining 0.7 percent. Poland's 10-year government bond yield dropped 4 basis points to below 2.73 percent, near 2-and-1/2-year high territory below 2.707 percent. Hungary's 10-year yield dropped 9 basis points from Wednesday's fixing to 2.75 percent, and traders projected that Thursday's Hungarian government bond auctions would draw strong demand. "The international environment helps bonds," one Budapest-based trader said. "The Hungarian central bank's envisaged tightening means it would fight inflation ... This is a win-win situation for long-term bonds," the trader added. CEE SNAPSHOT AT MARKETS 1019 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7770 25.7900 +0.05% -0.27% crown > Hungary <EURHUF= 315.8500 315.9700 +0.04% +1.66% forint > Polish <EURPLN= 4.2804 4.2884 +0.19% +0.21% zloty > Romanian <EURRON= 4.7380 4.7505 +0.26% -1.77% leu > Croatian <EURHRK= 7.4195 7.4220 +0.03% -0.13% kuna > Serbian <EURRSD= 118.3700 118.4500 +0.07% -0.06% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1039.81 1034.950 +0.47% +5.40% 0 Budapest 41031.15 40862.97 +0.41% +4.83% Warsaw 2371.06 2357.79 +0.56% +4.15% Bucharest 7096.11 7043.64 +0.74% -3.89% Ljubljana <.SBITOP 839.84 840.38 -0.06% +4.42% > Zagreb 1761.81 1762.17 -0.02% +0.74% Belgrade <.BELEX1 698.55 699.87 -0.19% -8.29% 5> Sofia 583.15 575.27 +1.37% -1.90% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.7260 -0.0040 +228bps -1bps R> 5-year <CZ5YT=R 1.6250 -0.0640 +196bps -6bps R> 10-year <CZ10YT= 1.7630 -0.0220 +159bps -1bps RR> Poland 2-year <PL2YT=R 1.4830 -0.0180 +204bps -3bps R> 5-year <PL5YT=R 2.1390 -0.0360 +247bps -4bps R> 10-year <PL10YT= 2.7280 -0.0430 +256bps -3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.07 2.11 2.13 1.99 <PRIBOR= > Hungary 0.33 0.53 0.75 0.15 Poland 1.73 1.72 1.72 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest. Editing by Jane Merriman)

China's Huawei excluded from Czech tax tender after security warning

30 Jan 2019

PRAGUE China's Huawei has been excluded from a Czech tender to build a tax portal after the country's cyber watchdog warned of possible security threats posed by the telecoms supplier, documents showed on Wednesday.

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