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Jason Hovet

CEE MARKETS-Politics dominate news, markets mildly positive

11 Oct 2019

By Marton Dunai and Jason Hovet BUDAPEST/PRAGUE, Oct 11 Emerging European assets opened on a mildly positive note on Friday as politics dominated the news in most markets, with elections due in Poland and Hungary, and the Romanian government falling after losing a confidence vote. Poland, by far the region's largest economy, holds general elections on Sunday in which the ruling Law and Justice (PiS) party is expected to hold on to power, paving the way for spending increases and likely continued friction with the European Union . The fiscal impact of those measures has mostly been priced in, so an albeit unlikely opposition victory would trigger a sharp rally in Polish assets, Commerzbank said in a note to clients. "Going with the major polls, our base-case is that PiS will win handily and set up a majority government," it said. "Sharp minimum wage hikes and spending increases will follow, driving the fiscal deficit wider next year. Conflict with the EU will continue in the background." Opinion polls show that conservative leader Jaroslaw Kaczynski's PiS, a eurosceptic grouping with a nationalist tilt, is likely to win a second term but may have to seek allies among the opposition. Romanian Prime Minister Viorica Dancila's centre-left government collapsed on Thursday after losing a no-confidence vote in parliament, raising the prospect of prolonged political uncertainty due to a fragmented opposition. A new cabinet will be elected in a Parliamentary procedure but a new election is unlikely before next year. The leu has been stable, and Commerzbank said it was unlikely to take a big hit as "changes in government really are nothing new in Romania." "Further depreciation potential is likely to be limited... there is now hope of a new direction being taken in politics, in particular as regards fiscal policy, which would reduce the potential for conflict with the EU." Hungary holds municipal elections on Sunday that may have little impact on local assets - the ruling right-wing Fidesz party is expected to maintain its dominance of municipalities nationwide and of politics overall. Prime Minister Viktor Orban has had a two-thirds majority in parliament - enough to push through constitutional changes - for most of his decade in power, and even the strongest showing for a broad opposition alliance would only dent that dominance slightly. No general election is due until 2022. CEE SNAPSHOT AT MARKETS 0946 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.8300 25.8210 -0.03% -0.48% crown Hungary 331.5500 332.3200 +0.23% -3.16% forint Polish 4.3048 4.3143 +0.22% -0.35% zloty Romanian 4.7595 4.7553 -0.09% -2.22% leu Croatian 7.4275 7.4255 -0.03% -0.24% kuna Serbian 117.4000 117.5000 +0.09% +0.77% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1005.46 997.2800 +0.82% +1.92% Budapest 39695.92 39466.35 +0.58% +1.42% Warsaw 2130.28 2122.99 +0.34% -6.43% Bucharest 9513.18 9479.50 +0.36% +28.84% Ljubljana 866.12 870.11 -0.46% +7.69% Zagreb 1944.18 1940.56 +0.19% +11.17% Belgrade <.BELEX15 746.67 747.70 -0.14% -1.97% > Sofia 558.51 557.44 +0.19% -6.05% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.2500 -0.0040 +196bps +0bps > 5-year <CZ5YT=RR 1.0340 0.0090 +176bps +2bps > 10-year <CZ10YT=R 1.2470 0.0040 +174bps +1bps R> Poland 2-year <PL2YT=RR 1.5070 0.0030 +222bps +1bps > 5-year <PL5YT=RR 1.6850 -0.0250 +242bps -2bps > 10-year <PL10YT=R 1.9270 -0.0070 +242bps +0bps R> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep < 2.27 2.24 2.12 2.17 PRIBOR=> Hungary < 0.27 0.30 0.33 0.21 BUBOR=> Poland < 1.73 1.70 1.68 1.72 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Marton Dunai; Editing by Hugh Lawson)

Most CEE currencies seen returning to gains in the next year: Reuters poll

04 Oct 2019

PRAGUE Central Europe's leading currencies should firm against the euro over the next year, lifted by solid growth once global worries calm, although the expected gains will be less than previously forecast, a Reuters poll showed on Friday.

CEE MARKETS-Currencies stabilise, bond yields tick up in ECB aftermath

13 Sep 2019

By Jason Hovet PRAGUE, Sept 13 Central European currencies steadied on Friday after rallying when the European Central Bank cut interest rates deeper into negative territory and promised more bond purchases, while the region's yields ticked back up. The ECB's launch of further stimulus to stoke a euro zone economic recovery, which has lagged solid growth in central Europe, gave a quick boost to the region's assets on Friday before questions over the plans' effectiveness arose. Currencies had spiked on Thursday after the ECB action but then gave back some gains while the yield on Poland's 10-year benchmark dropped briefly below 2% before settling. It was last bid at 2.08% on Friday. Unlike with the ECB, monetary policy in central Europe remains in a wait-and-see mode. "In our view, in the coming weeks the potential for a return to historical lows is limited and 10-year bond (yields) will remain above 2 percent," PKO Bank Polski in Warsaw said. Czech bond yields also ticked up 2-5 basis points along the longer end of the curve, with 10-year paper at a mid-yield of 1.34% in Friday trading and Hungarian yields rising by up to 6 basis points, putting the 10-year benchmark yield at 2.12%. One dealer said market focus was already turning toward a U.S. Federal Reserve policy meeting along with Hungarian and Czech central bank meetings this month for more guidance. By 0844 GMT, the Hungarian forint had dropped 0.1% to 332.77 bid against the euro, just off a record low 333.46 hit this week. Poland's zloty also fell to 4.34 to the euro and the Czech crown and Romanian leu were a touch higher. Most analysts do not expect the region's central banks to follow the ECB action, and also a loosening of policy by the U.S. Fed anytime soon. "In Hungary and Czech Republic, we expect the central banks to keep rates on hold with downside risks from weaker growth in the euro area and the ECB's easing of monetary conditions to outweigh the still strong domestic demand growth and inflation pressures," Morgan Stanley said. Czech rates markets price in cuts over the next year although rates have slightly ticked up in recent weeks. ING economist Jakub Seidler in Prague said the need for Czech interest rate cuts was limited this year. Czech central bankers Marek Mora and Oldrich Dedek both told Reuters this week rate stability was likely as a solid domestic economy remains resilient so far to slowdowns abroad. CEE SNAPSH AT MARKETS OT 1044 CET CURREN CIES Latest Previo Daily Change us bid close change in 2019 EURCZK Czech <EURCZK 25.849 25.862 +0.05 -0.55% = crown => 0 5 % EURHUF Hungary <EURHUF 332.77 332.45 -0.10% -3.51% = forint => 00 00 EURPLN Polish <EURPLN 4.3403 4.3356 -0.11% -1.17% = zloty => EURRON Romania <EURRON 4.7355 4.7376 +0.04 -1.72% = n leu => % EURHRK Croatia <EURHRK 7.3950 7.3933 -0.02% +0.20 = n kuna => % EURRSD Serbian <EURRSD Retrie 117.50 #VALUE #VALUE = dinar => ving.. 00 ! ! . Note: calculated from 1800 daily CET change Latest Previo Daily Change us close change in 2019 .PX Prague 1049.7 1049.4 +0.04 +6.41 9 200 % % .BUX Budapes 40090. 40066. +0.06 +2.43 t 69 95 % % .WIG20 Warsaw <.WIG20 2197.2 2189.0 +0.37 -3.49% > 4 7 % .BETI Buchare 9216.6 9221.6 -0.05% +24.8 st 8 9 3% .SBITO Ljublja <.SBITO 850.27 851.62 -0.16% +5.72 P na P> % .CRBEX Zagreb <.CRBEX 1889.4 1891.7 -0.12% +8.04 > 3 9 % .BELEX Belgrad <.BELEX 763.80 762.59 +0.16 +0.28 15 e 15> % % .SOFIX Sofia <.SOFIX 577.43 578.01 -0.10% -2.86% > BONDS Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republi c CZ2YT= <CZ2YT= 1.2740 0.0540 +195b +3bps RR 2-year RR> ps CZ5YT= <CZ5YT= 1.1340 -0.038 +188b -7bps RR 5-year RR> 0 ps CZ10YT <CZ10YT 1.3940 0.0540 +189b +1bps =RR 10-year =RR> ps Poland PL2YT= <PL2YT= 1.5720 0.0110 +225b -1bps RR 2-year RR> ps PL5YT= <PL5YT= 1.8560 0.0430 +260b +1bps RR 5-year RR> ps PL10YT <PL10YT 2.0870 0.0580 +258b +2bps =RR 10-year =RR> ps FORWARD RATE AGREEM ENT 3x6 6x9 9x12 3M interb ank Czech <CZKFRA 2.11 2.01 1.99 2.14 Rep ><PRIBO R=> Hungary <HUFFRA 0.26 0.30 0.33 0.21 ><BUBOR => Poland <PLNFRA 1.73 1.71 1.69 1.72 ><WIBOR => Note: are for ask FRA prices quotes **************************************** ********************** (Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Alan Charlish in Warsaw; editing by Emelia Sithole-Matarise)

Czech interest rates going nowhere for next 12 months - cenbank Mora

11 Sep 2019

PRAGUE, Sept 11 Czech interest rates should stay on an even keel over the next year to keep domestic inflationary pressures under control even while global central banks shift to policy easing, Czech National Bank Vice-Governor Marek Mora said in an interview.

CEE MARKETS-Forint climbs off record low, GDP stays strong in region

30 Aug 2019

* Hungarian GDP confirmed, Polish, Czech data revised up * Hungary leads region with 4.9% annual rise in second quarter * But forint, region's FX under pressure amid global mood * Forint just off record low * Zloty headed for biggest monthly drop since 2016 By Jason Hovet PRAGUE, Aug 30 Hungary's forint climbed from an all-time low on Friday but underperformed its central European peers, boosted by better-than-estimated growth figures and some hopes global trade tensions might ease. Central European currencies have been battered in August, hitting record lows amid worries over the global economy, U.S.-China trade tensions and the threat of a disorderly exit by Britain from the European Union that could upend the region. Even with gains on Friday, Poland's zloty is set for its biggest monthly decline since November 2016, down over 2%. The forint has dropped 1.5% and reached a record low of 331.85 to the euro on Thursday. The Hungarian currency got some relief on Friday, edging up 0.1% to 331.15 per euro, after data confirmed the country's second-quarter growth led the region at 4.9% year-on-year, the same as a flash estimate. Erste Investment said the forint has been strongly correlated to the euro versus the dollar, which has weakened, and domestic banking liquidity, which has risen. "Regarding the first factor, for now there are no signs of a reversal. In terms of the second factor, the (central bank) NBH could try to intervene through its FX swaps and wrestle down interbank liquidity to strengthen the forint," Erste said. "However, it is not clear whether this would be in the interest of the central bank at the current exchange-rate level. Barring any signal to this end, market players may continue to test the patience of the central bank." Elsewhere, the zloty, near a 13-month low, gained 0.2% to 4.385 to the euro by 0911 GMT and the Czech crown , just off its weakest level this year, added over 0.1% to 25.88. Stocks also gained, led by a 2.3% rise for Warsaw's blue-chip index. Data on Friday showed Poland's economy expanded by 4.5% year-on-year last quarter and the Czech Republic's by 2.7%, both faster than flash estimates, giving comfort to a region where domestic demand is a key growth driver as the euro zone slows and key trade partner Germany flirts with recession. "The breakdown shows that domestic demand still remains the main driver of growth and it is unlikely to change, especially in the environment of worsening global climate," Santander Bank Polska said, predicting slowing in the coming quarters because of fading investment growth and weaker exports. Pavel Sobisek, Unicredit's chief economist in Prague, said the Czech growth figures were a dilemma for the central bank, which after a two-year tightening cycle has shifted into neutral as the European Central Bank and U.S. Federal Reserve show an easing bias. "General price growth in the Czech economy will reflect in price pressures for consumers, but the (central bank) CNB will hardly muster the courage to raise rates. The result will probably be a longer period of unchanged interest rates," he said. CEE SNAPSHO AT MARKETS T 1111 CET CURRENC IES Latest Previou Daily Change s bid close change in 2019 EURCZK Czech <EURCZK 25.8800 25.9095 +0.11% -0.67% = crown => EURHUF Hungary <EURHUF 331.150 331.450 +0.09% -3.04% = forint => 0 0 EURPLN Polish <EURPLN 4.3848 4.3927 +0.18% -2.17% = zloty => EURRON Romanian <EURRON 4.7286 4.7273 -0.03% -1.58% = leu => EURHRK Croatian <EURHRK 7.4030 7.4015 -0.02% +0.09% = kuna => EURRSD Serbian <EURRSD 117.590 117.780 +0.16% +0.60% = dinar => 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 .PX Prague 1033.86 1031.02 +0.28% +4.79% 00 .BUX Budapest 39632.4 39264.4 +0.94% +1.26% 7 8 .WIG20 Warsaw <.WIG20 2117.12 2069.33 +2.31% -7.01% > .BETI Buchares 9237.00 9241.52 -0.05% +25.10 t % .SBITO Ljubljan <.SBITO 851.03 852.20 -0.14% +5.82% P a P> .CRBEX Zagreb <.CRBEX 1866.91 1875.69 -0.47% +6.75% > .BELEX Belgrade <.BELEX 744.89 744.89 +0.00% -2.21% 15 15> .SOFIX Sofia <.SOFIX 571.08 570.53 +0.10% -3.93% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 1.1500 0.0340 +205bp +3bps RR RR> s CZ5YT= 5-year <CZ5YT= 0.8510 0.0130 +178bp +1bps RR RR> s CZ10YT <CZ10YT 1.0660 -0.0040 +176bp +0bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 1.5850 0.0180 +249bp +2bps RR RR> s PL5YT= 5-year <PL5YT= 1.7000 0.0270 +263bp +2bps RR RR> s PL10YT <PL10YT 1.8660 0.0460 +256bp +5bps =RR 10-year =RR> s FORWARD RATE AGREEME NT 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 2.09 1.91 1.73 2.14 Rep ><PRIBO R=> Hungary <HUFFRA 0.31 0.36 0.40 0.26 ><BUBOR => Poland <PLNFRA 1.72 1.67 1.61 1.72 ><WIBOR => Note: are for ask FRA prices quotes ******************************************** ****************** (Reporting by Jason Hovet in Prague, Gergely Szakacs in Budapest and Alan Charlish in Warsaw; writing by Jason Hovet; editing by Larry King )

CEE MARKETS-Zloty hits 13-month low as CEE growth slows

14 Aug 2019

* Poland, Hungary, Romania grow strongly in Q2 despite slowing * Czech Republic, Slovakia slowing faster as trade bites * Currencies stuck on weak footing, stocks down By Jason Hovet PRAGUE, Aug 14 The Polish zloty fell to a 13-month low on Wednesday, drifting weaker in light trading as data showed the euro zone's slowdown starting to put the brakes on central Europe's faster growing economies. The region has continued to post solid growth as low domestic interest rates and wage growth fuel domestic demand and mitigate the effects of a slowdown in western European trading partners that is taking a toll particularly on the Czech Republic and also now Slovakia. But signs of central European economies starting to cool more added to poor market sentiment in the region, which has worsened this month amid growing global trade fears. On Wednesday, the zloty lost 0.4% to bid at 4.353 to the euro by 0944 GMT and the Czech crown fell 0.1% to 25.851, also just off a 2-1/2 month low. "We saw some risk-off flows yesterday and this week, so the zloty is just losing most, I guess, because of the proximity of the year's (low)," a Warsaw-based dealer said, adding low liquidity just before a local holiday was helping to exaggerate moves. Polish growth has been more immune to western European troubles. The economy expanded 4.4% year-on-year in the second quarter, down from 4.7% in the previous quarter. Analysts, though, expect Poland and Hungary - where second-quarter growth eased to 4.9% from a 15-year high of 5.3% - to slow in the coming quarters as external demand woes become a bigger factor, which has been signaled by manufacturing surveys in recent months. Romania, which like Hungary, has seen a construction boom, grew 4.4% year-on-year last quarter. The Hungarian forint and Romania's leu dipped nearly 0.1% on Wednesday. "So far, domestic demand has offset headwinds from the euro-zone," Capital Economics economist Liam Peach said. "But there were signs towards the end of Q2 that export weakness was taking a heavier toll, particularly in Poland. "With the manufacturing PMIs for July falling sharply and Germany's industrial recession intensifying in June, we expect the weak external backdrop to take a bigger toll on regional growth over the rest of 2019." Germany's economy posted a quarterly contraction in the April-June period, data on Wednesday showed. That bodes poorly for countries like the Czech Republic and Slovakia that are highly linked to the German car industry. Slovakia's second-quarter growth widely missed the mark, according to data on Wednesday, with growth 1.9% year-on-year, well below a Reuters poll forecast of 3.3%. In the Czech Republic, where growth was clicking along above 4% just a year ago, the economy expanded by 2.7% in the last quarter. Stock markets in the region mostly slipped, led by a 0.9% drop in Budapest. A jump in software security firm Avast after strong quarterly earnings on Wednesday boosted Prague's PX index. CEE SNAPSHO AT MARKETS T 1143 CET CURRENC IES Latest Previou Daily Change s bid close change in 2019 EURCZK Czech <EURCZK 25.8510 25.8285 -0.09% -0.56% = crown => EURHUF Hungary <EURHUF 323.420 323.230 -0.06% -0.72% = forint => 0 0 EURPLN Polish <EURPLN 4.3530 4.3351 -0.41% -1.46% = zloty => EURRON Romanian <EURRON 4.7215 4.7200 -0.03% -1.43% = leu => EURHRK Croatian <EURHRK 7.3880 7.3900 +0.03% +0.30% = kuna => EURRSD Serbian <EURRSD 117.680 117.730 +0.04% +0.53% = dinar => 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 .PX Prague 1035.52 1030.29 +0.51% +4.96% 00 .BUX Budapest 40290.1 40722.3 -1.06% +2.94% 9 6 .WIG20 Warsaw <.WIG20 2103.31 2140.19 -1.72% -7.61% > .BETI Buchares 9134.21 9115.80 +0.20% +23.71 t % .SBITO Ljubljan <.SBITO 862.86 861.34 +0.18% +7.29% P a P> .CRBEX Zagreb <.CRBEX 1893.16 1885.68 +0.40% +8.25% > .BELEX Belgrade <.BELEX 739.14 746.15 -0.94% -2.96% 15 15> .SOFIX Sofia <.SOFIX 582.39 582.16 +0.04% -2.03% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 1.0350 0.0010 +191bp -1bps RR RR> s CZ5YT= 5-year <CZ5YT= 0.7200 -0.0210 +161bp -1bps RR RR> s CZ10YT <CZ10YT 0.9440 0.0130 +157bp +3bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 1.5180 -0.0150 +239bp -2bps RR RR> s PL5YT= 5-year <PL5YT= 1.6770 -0.0440 +256bp -3bps RR RR> s PL10YT <PL10YT 1.8210 -0.0460 +245bp -3bps =RR 10-year =RR> s FORWARD RATE AGREEME NT 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 1.99 1.76 1.57 2.14 Rep ><PRIBO R=> Hungary <HUFFRA 0.29 0.31 0.34 0.26 ><BUBOR => Poland <PLNFRA 1.70 1.63 1.57 1.72 ><WIBOR => Note: are for ask FRA prices quotes ******************************************** ****************** (Reporting by Krisztina Than in Budapest, Luiza Ilie in Bucharest and Alan Charlish in Warsaw Writing by Jason Hovet Editing by Keith Weir)

CEE MARKETS-Assets lower as Fed makes waves, economic sentiment worsening

01 Aug 2019

By Jason Hovet and Marton Dunai PRAGUE/BUDAPEST, Aug 1 Emerging European assets dipped on Thursday after the U.S. Federal Reserve cut rates for the first time in more than a decade and local economies showed signs of a worsening outlook, leaving investors with several new factors to weigh. Wall Street turned negative on Wednesday after Federal Reserve Chairman Jerome Powell characterised the U.S. central bank's first rate cut since 2008 as a "mid-cycle adjustment to policy," suggesting the move was not the start of a lengthy series of rate cuts. Emerging European assets tend to be sensitive to risk appetite, weakening when global factors spook investors. On Thursday morning the Czech crown traded around an 8-week low before a central bank meeting in Prague, where analysts predicted rates would stay unchanged at 2% as the bank balances global uncertainties with a still solid economy. There will be a new outlook, with the attention focused mostly on the bank's new assumptions for the euro/crown cross. "We expect the voting board to cite the global risks again as a reason to keep the 'wait and see' mode today. Still, it will be worth (to) watch where the new forecast sees the FX rate prediction," Komercni Banka rates trader Dalimil Vyskovsky said. Czech forward rate agreements point to market expectations of interest rate cuts in the next year although analysts expect the bank will signal rate stability ahead for now. "We expect the CNB has no reason to support exaggerated market expectations and will stay with its declaration of rate stability," CSOB said. Manufacturing business sentiment fell around the region, signalling a waning confidence despite the region's resilience to economic challenges in recent years. Czech sentiment fell to a 10-year low in July, sharply below analysts' forecast, the Markit Purchasing Managers' Index (PMI) showed on Thursday. Hungary's PMI also continued to fall last month, staying just below the threshold separating expansion from contraction, while a contraction in Polish factory activity accelerated. Poland's central bank is flexible when reacting to shocks and should be so, as it has to take into account the reasons for the shocks and their durability, The National Bank of Poland's governor said in an article for the Rzeczpospolita daily on Thursday. All three major stock indices fell in emerging central Europe, following a market dip in the U.S. and other core markets. CEE SNAPSHOT AT MARKETS 1009 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.7100 25.6850 -0.10% -0.01% crown Hungary 326.3000 325.7400 -0.17% -1.60% forint Polish 4.2934 4.2840 -0.22% -0.09% zloty Romanian 4.7335 4.7315 -0.04% -1.68% leu Croatian 7.3800 7.3823 +0.03% +0.41% kuna Serbian 117.5700 117.6900 +0.10% +0.62% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1053.56 1056.690 -0.30% +6.79% 0 Budapest 40645.90 40767.60 -0.30% +3.85% Warsaw 2272.47 2277.37 -0.22% -0.18% Bucharest 9194.65 9204.15 -0.10% +24.53% Ljubljana 869.54 870.59 -0.12% +8.12% Zagreb 1911.29 1911.58 -0.02% +9.29% Belgrade <.BELEX15 743.92 747.49 -0.48% -2.33% > Sofia 581.72 580.68 +0.18% -2.14% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.1580 0.0850 +193bps +7bps > 5-year <CZ5YT=RR 1.1080 0.0340 +184bps +2bps > 10-year <CZ10YT=R 1.2240 0.0000 +165bps -1bps R> Poland 2-year <PL2YT=RR 1.5580 0.0000 +233bps -1bps > 5-year <PL5YT=RR 1.9200 0.0310 +265bps +2bps > 10-year <PL10YT=R 2.2110 0.0320 +264bps +2bps R> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep < 2.13 2.03 1.92 2.16 PRIBOR=> Hungary < 0.34 0.42 0.48 0.26 BUBOR=> Poland < 1.74 1.73 1.74 1.72 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Marton Dunai Editing by Raissa Kasolowsky)

Czech telecom hopeful wants more spectrum available in 5G auction

30 Jul 2019

PRAGUE Czech Republic-based Nordic Telecom, aiming to become the country's fourth mobile operator, wants an upcoming auction of new-generation 5G frequencies to offer a greater proportion of spectrum for potential newcomers.

CEE MARKETS-Czech crown gains; central banker says room for rate rise

13 Jun 2019

* Crown gains as rate-setter Benda sees room for rate increase * Loose Fed, euro zone growth concern blurs CEE rate outlook * Hungarian rates jump on retail bond sale success By Sandor Peto and Jason Hovet BUDAPEST/PRAGUE, June 13 The crown gained on Thursday after a Czech central bank board member said he still saw room to raise interest rates. Other Central European currencies fell. The remarks by Czech policy-maker Vojtech Benda came in a Bloomberg interview that followed similarly hawkish comments made the governor of the central bank, Jiri Rusnok, on Tuesday. The outlook for Central European interest rates is unclear. The Federal Reserve is expected to cut rates soon and the European Central Bank might eventually follow suit. Central Europe's economies are linked with both regions, especially the euro zone. But surging wages are fuelling inflation in Central Europe, putting pressure on its central banks to raise rates. The uncertainty over rates is the most visible in the Czech Republic, where forward rate agreements price in rate cuts, after eight rate increases since 2017. The crown rose to 25.58 versus the euro by 0844 GMT. The forint and the zloty each fell 0.1%. The leu continued to fall from five-month highs, trading at 4.7245 versus the euro, after April figures showed weak annual growth in industrial output and a widening in the current account deficit in Romania. The central bank is widely expected to fight inflation by tightening liquidity in leu markets, but some analysts said after Tuesday's higher-than-expected inflation data that the bank may discuss a rate increase. In Hungary, the successful introduction of a new retail government bond reduced forint liquidity, casting doubt on the need of a further cut in the central bank's liquidity-creating FX swaps at its meeting on June 25. The overnight BUBOR interbank interest rate has quadrupled since last week, to 0.24 percent, rising above longer maturities. Depressed Bund and U.S. Treasury yields, coupled with the strong retail bond sales, can help Hungary's debt agency AKK to lengthen the average maturity of its outstanding debt, traders said. Government bond yields were mostly flat in the region. Hungary's 10-year bond traded around 2.8%. CEE SNAPSHOT AT MARKETS 1044 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.5800 25.5820 +0.01% +0.50% crown > Hungary <EURHUF= 322.2500 322.0000 -0.08% -0.36% forint > Polish <EURPLN= 4.2605 4.2580 -0.06% +0.68% zloty > Romanian <EURRON= 4.7245 4.7235 -0.02% -1.49% leu > Croatian <EURHRK= 7.4170 7.4115 -0.07% -0.09% kuna > Serbian <EURRSD= 117.9800 118.0100 +0.03% +0.27% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1054.36 1051.990 +0.23% +6.87% 0 Budapest 40764.97 40592.32 +0.43% +4.15% Warsaw 2286.98 2282.80 +0.18% +0.45% Bucharest 8577.98 8591.06 -0.15% +16.17% Ljubljana <.SBITOP 872.22 870.54 +0.19% +8.45% > Zagreb 1912.50 1912.85 -0.02% +9.36% Belgrade <.BELEX1 731.91 731.10 +0.11% -3.91% 5> Sofia 577.17 578.63 -0.25% -2.91% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6860 0.0790 +235bps +8bps R> 5-year <CZ5YT=R 1.5020 -0.0230 +210bps -2bps R> 10-year <CZ10YT= 1.6230 0.0120 +187bps +2bps RR> Poland 2-year <PL2YT=R 1.6380 -0.0260 +231bps -2bps R> 5-year <PL5YT=R 2.0120 -0.0140 +261bps -1bps R> 10-year <PL10YT= 2.5000 -0.0020 +275bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.15 2.05 1.96 2.17 <PRIBOR= > Hungary 0.29 0.44 0.57 0.18 Poland 1.75 1.72 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest, editing by Larry King)

UPDATE 1-CEE MARKETS-CPI rise fails to boost Czech crown as dollar consolidates

11 Jun 2019

* Czech CPI rises, CNB chief says hike is optimal next move * Czech markets remain split over interest rate outlook * CEE currencies retreat as dollar decline halts * Poland leads rise in bond yields as money flows into equities (Adds further Czech central bank comments, bonds, stocks) By Sandor Peto and Jason Hovet BUDAPEST/PRAGUE, June 11 A surprise rise in Czech inflation failed to strengthen the crown on Tuesday as Central European currencies pause this week after a rallying to multi-week highs on global dollar selling. The greenback has weakened in the recent weeks on growing expectations for Federal Reserve interest rate cuts but steadied on Tuesday. While inflation has been moderate in developed economies, it has been pushed higher by a surge in wages in the European Union's fast-growing emerging markets. The correlation of the Czech crown's and the forint's euro crosses with the dollar index is the strongest this year. With the dollar consolidating, the forint eased 0.2% to 320.75 against the euro by 1241 GMT. The crown, the zloty and the leu shed 0.1%. Czech annual inflation picked up to 2.9% in May, above the 2.7% forecast by analysts. It would be optimal if the current pause in monetary policy changes is followed by more interest rate growth as rates are still not at normal levels, Czech central bank (CNB) Governor Jiri Rusnok said. That is a change compared to comments suggesting neutrality after the CNB's latest interest rate hike in early May. Core inflation was marginally lower than expected and the new figures bear out the message of the CNB's current forecast, the bank said in a statement, adding that overall inflation pressures were easing. Market participants remained split over the CNB interest rate outlook after the figures. Some analysts predict that the CNB will continue to increase interest rates this year or next, but markets are pricing in an easing as the European Central Bank is also expected to maintain a loose policy. Yields on Czech domestic bonds and forward rate agreements ticked slightly higher, with the 10-year bond yield at around 1.61%. "We (still) have nearly two rate cuts priced in (over the next year) which is strongly overdone," a dealer said. Polish yields also rose, tracking Bunds and other euro zone bonds as investments flowed into riskier equity markets after the United States stepped back from imposing trade tariffs on Mexico. The 10-year Polish yield rose 4 basis points to 2.537%, while Hungary bucked the trend with its 10-year yield falling by 3 basis points to 2.85%. Budapest's main equity index rose 0.6%, mainly driven by an 1.2% rise in OTP Bank shares, which managed to break through a technical line at 12,400 forints after several failed attempts in the past month. CEE SNAPSHOT AT MARKETS 1441 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6400 25.6200 -0.08% +0.26% crown > Hungary <EURHUF= 320.7500 320.0500 -0.22% +0.10% forint > Polish <EURPLN= 4.2678 4.2630 -0.11% +0.51% zloty > Romanian <EURRON= 4.7236 4.7190 -0.10% -1.47% leu > Croatian <EURHRK= 7.4130 7.4155 +0.03% -0.04% kuna > Serbian <EURRSD= 118.0400 117.9500 -0.08% +0.22% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1063.87 1059.220 +0.44% +7.84% 0 Budapest 41406.56 41159.57 +0.60% +5.79% Warsaw 2298.00 2282.51 +0.68% +0.94% Bucharest 8626.22 8583.26 +0.50% +16.83% Ljubljana <.SBITOP 872.28 879.66 -0.84% +8.46% > Zagreb 1904.73 1889.07 +0.83% +8.92% Belgrade <.BELEX1 731.70 731.88 -0.02% -3.94% 5> Sofia 578.64 581.37 -0.47% -2.66% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6060 0.0060 +227bps +66bps R> 5-year <CZ5YT=R 1.5360 0.0240 +212bps +61bps R> 10-year <CZ10YT= 1.6890 0.0360 +192bps +26bps RR> Poland 2-year <PL2YT=R 1.6570 0.0050 +232bps +66bps R> 5-year <PL5YT=R 2.0460 0.0900 +263bps +67bps R> 10-year <PL10YT= 2.5570 0.0800 +278bps +31bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.15 2.07 1.97 2.17 <PRIBOR= > Hungary 0.29 0.42 0.55 0.18 Poland 1.75 1.74 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 283.2000 forints) (Reporting by Sandor Peto; Editing by Kirsten Donovan)

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