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Krisztina Than

CEE MARKETS-Stocks gain in post-Fed optimism, Czech T-bill auction eyed

12 Dec 2019

By Krisztina Than BUDAPEST, Dec 12 Central European stock markets jumped on Thursday after the Federal Reserve forecast that it would hold rates through 2020, which pushed money into equities and weakened the dollar. The Fed announcement late on Wednesday, which followed its decision to leave rates unchanged, sent the dollar to its weakest since early August. Stocks in the eastern corner of the European Union gained, led by a 1.5% jump in Warsaw, while Prague's blue-chip index rose 0.8% and Budapest's main index gained 0.7%. "Following yesterday's Fed rate decision, international investor sentiment is slightly positive," brokerage Equilor said in a note in Budapest. The forint also gained 0.22% from late Wednesday levels to trade stronger than 330 versus the euro. "Its gains could perhaps be due to the Fed," a Budapest-based dealer said. The Czech crown held on to gains as higher-than-expected domestic inflation and some positive expectations over the British election boosted the currency this week. However, the crown looked to be stuck just on the weak side of the psychological 25.5 level. "To get below (this level) will not be very simple even with some clarity on the Brexit situation," CSOB said. Hungary's central bank will keep interest rates unchanged next Tuesday according to a Reuters poll, which foresees hardly any tightening in Hungarian monetary policy through to the end of 2021 as inflation stabilises. Hungary also released its 2020 debt financing plan on Thursday. The government said it wants to boost debt issuance to households, while cutting foreign currency debt further. The finance minister announced that the government will issue a new 20-year benchmark bond next year. Gross forint-denominated bond issues in 2020 will be significantly below 2019 levels, the debt agency also said. Czechs will auction Treasury bills for the first time in two months, likely to draw strong demand as many investors look to part with crown cash at the year-end. "Should the yield be low enough, historically the MoF has been eager to sell much more, so we might see an interesting battle today," Komercni Banka rates trader Dalimil Vyskovsky said in a client note. "It's hard to predict where the yield would be, economically it is to be expected to offer some pickup over the the FX swap implied yields, however late last year the story has been that a single account bidding at ridiculously low levels might make MoF sell just a fraction of amount offered at that low yield and reject everyone else…" CEE SNAPSHOT AT MARKETS 1108 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.5260 25.5050 -0.08% +0.71% crown Hungary 329.5000 330.2100 +0.22% -2.55% forint Polish 4.2840 4.2826 -0.03% +0.13% zloty Romanian 4.7787 4.7795 +0.02% -2.61% leu Croatian 7.4347 7.4375 +0.04% -0.33% kuna Serbian 117.4800 117.4900 +0.01% +0.70% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1088.33 1079.960 +0.78% +10.32% 0 Budapest 44914.22 44603.48 +0.70% +14.76% Warsaw 2077.17 2047.34 +1.46% -8.76% Bucharest 9803.13 9810.25 -0.07% +32.77% Ljubljana 912.92 911.44 +0.16% +13.51% Zagreb 1985.99 1988.16 -0.11% +13.56% Belgrade <.BELEX15 776.53 779.67 -0.40% +1.95% > Sofia 542.34 542.96 -0.11% -8.77% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.5530 -0.1760 +225bps -17bps > 5-year <CZ5YT=RR 1.2210 -0.0030 +180bps +0bps > 10-year <CZ10YT=R 1.5120 0.0390 +184bps +4bps R> Poland 2-year <PL2YT=RR 1.4030 -0.0020 +210bps +0bps > 5-year <PL5YT=RR 1.7540 0.0040 +233bps +1bps > 10-year <PL10YT=R 2.0070 0.0370 +233bps +4bps R> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep < 2.23 2.23 2.17 2.18 PRIBOR=> Hungary < 0.26 0.31 0.34 0.16 BUBOR=> Poland < 1.72 1.71 1.66 1.70 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Additional reporting by Jason Hovet in Prague, Editing by Kirsten Donovan)

'Pigs, hands off the theatre' - Hungarians protest for artistic freedom

09 Dec 2019

BUDAPEST Hungary's government submitted plans to parliament on Monday to tighten its control over theatres, triggering protests from actors and audiences who feel that artistic freedom is under threat.

Hungary's government plans to tighten control over theatres

06 Dec 2019

BUDAPEST Hungary's nationalist government plans to tighten control over theatres, in a move critics said could undermine their independence and stifle artistic freedom.

CEE MARKETS-Hungarian bourse shines, led by OTP's 2.3% jump to record high

04 Dec 2019

By Krisztina Than BUDAPEST, Dec 4 Hungary's stock market rose over 1.6% on Wednesday morning, outperforming its Central European peers as investor sentiment in the world improved with twists and turns in the Sino-U.S. trade war keeping markets on a roller coaster ride. Central European currencies also firmed slightly, with the Polish zloty up 0.1% in line with the Hungarian forint , which also gained 0.1% to trade at around 331.30 versus the euro, distancing from its all-time low of 337.21 hit last week. "The Hungarian bourse jumped more than the others, in a positive correction," said Zoltan Varga, senior analyst at brokerage Equilor. He said this could largely be due to a 2.3% rise in OTP, Hungary's largest bank, which rose to a new record high at 14,630 forints on Wednesday. OTP has been testing new highs for a while. Budapest's market gained 1.65% on the day by 1033 GMT, followed by Warsaw's WIG 20 up 0.8% and Prague flat. Poland's central bank holds a rate meeting later on Wednesday where it is expected to keep interest rates unchanged, as the region's central banks maintain a wait and see mode with economic growth expected to slow next year. "Nobody expects the MPC to change interest rates on Wednesday, but the tone of the comment may be eased, thus supporting the domestic debt market," PKO BP said in a note. "The only fresh remark could be about the Supreme Court ruling on FX mortgages which rocked asset markets last week - the central bank may want to reassure markets that it has the tools to counter any fallout from that ruling," Commerzbank analyst Tatha Ghose said in a note ahead of the meeting. He said the forex mortgage story could be "one potential source of exchange rate volatility going forward; the other could be acceleration in core inflation." "Core inflation has accelerated in Poland in recent months and this could become a factor later, but for now the central bank's status quo is likely to prove zloty-neutral," Ghose added. The Polish zloty weakened last week after a Polish Supreme Court verdict that investors fear raises the risk that Swiss franc mortgage loans will be converted into the local currency on terms unfavourable to banks. Thousands of Poles took out Swiss franc-denominated mortgages that have become prohibitively expensive to service after the franc soared in value. The National Bank of Hungary will publish the minutes of its November rate meeting at 1300 GMT on Wednesday. The bank left interest rates unchanged last month as expected. The bank maintained its accommodative policy stance and reiterated its view that dampening European economic activity would keep a lid on domestic price pressures. The bank next meets on Dec. 17 to discuss interest rates, and fresh inflation and GDP projections that could give clues regarding policy going head. CEE SNAPSHOT AT MARKETS 1042 CET CURRENCIES Latest Previou Daily Change s bid close change in 2019 EURCZK Czech <EURCZK 25.5120 25.5300 +0.07 +0.76% = crown => % EURHUF Hungary <EURHUF 331.3300 331.730 +0.12 -3.09% = forint => 0 % EURPLN Polish <EURPLN 4.2783 4.2833 +0.12 +0.26% = zloty => % EURRON Romanian <EURRON 4.7735 4.7785 +0.10 -2.50% = leu => % EURHRK Croatian <EURHRK 7.4355 7.4385 +0.04 -0.34% = kuna => % EURRSD Serbian <EURRSD 117.3700 117.480 +0.09 +0.79% = dinar => 0 % Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 .PX Prague 1077.57 1077.64 -0.01% +9.22% 00 .BUX Budapest 43645.24 43048.2 +1.39 +11.51 5 % % .WIG20 Warsaw <.WIG20 2106.64 2089.92 +0.80 -7.47% > % .BETI Buchares 9909.16 9879.22 +0.30 +34.20 t % % .SBITO Ljubljan <.SBITO 900.49 896.93 +0.40 +11.97 P a P> % % .CRBEX Zagreb <.CRBEX 2005.91 2004.46 +0.07 +14.70 > % % .BELEX Belgrade <.BELEX 769.97 770.96 -0.13% +1.09% 15 15> .SOFIX Sofia <.SOFIX 541.31 544.24 -0.54% -8.94% > BONDS Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT= 2-year <CZ2YT= 1.5490 0.0290 +219b +3bps RR RR> ps CZ5YT= 5-year <CZ5YT= 1.2560 0.0280 +187b +4bps RR RR> ps CZ10YT <CZ10YT 1.4720 -0.0020 +182b +0bps =RR 10-year =RR> ps Poland PL2YT= 2-year <PL2YT= 1.3810 -0.0200 +202b -2bps RR RR> ps PL5YT= 5-year <PL5YT= 1.7320 0.0070 +234b +2bps RR RR> ps PL10YT <PL10YT 2.0160 0.0490 +236b +5bps =RR 10-year =RR> ps FORWARD RATE AGREEME NT 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 2.22 2.22 2.16 2.18 Rep ><PRIBO R=> Hungary <HUFFRA 0.25 0.27 0.32 0.17 ><BUBOR => Poland <PLNFRA 1.73 1.68 1.63 1.71 ><WIBOR => Note: are for ask prices FRA quotes (Reporting by Krisztina Than, additional reporting by Alan Charlish Editing by Giles Elgood)

CEE MARKETS-Currencies slip as investors shun riskier assets

28 Nov 2019

By Krisztina Than BUDAPEST, Nov 28 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)

CEE MARKETS-Forint slips to record low, leu holds on to gains

26 Nov 2019

By Jason Hovet and Krisztina Than PRAGUE/BUDAPEST, Nov 26 The Hungarian forint slipped to a record low against the euro on Tuesday as the central bank's easy monetary policy stance, the loosest in central Europe, kept the currency under pressure. Most other central European currencies and stock markets dipped in early trade as investors shifted from optimism in U.S.-China trade talks to waiting for more concrete progress. The Romanian leu, though, stayed elevated after a post-election bounce that followed incumbent President Klaus Iohannis winning a run-off vote on Sunday. The forint remained hardest hit by investors, dropping past an all-time low hit in September to trade as weak as 336.95 to the euro. By 0928 GMT, the forint was down 0.2% at 336.50. It has lost 4.6% so far this year. "The underlying basic reason is monetary policy in Hungary," one dealer said. The National Bank of Hungary maintained its ultra-loose policy last week, keeping the base rate at 0.9% and the overnight deposit rate at minus 0.05%. It is sticking to its accommodative stance, especially as economic growth is expected to slow in Hungary next year from close to 5% this year. The central bank declined to comment on the forint in an emailed reply to Reuters questions on Tuesday. It has repeatedly said it has no exchange rate target. "Why would the forint have strengthened? Nothing has changed, apart from the fact that sentiment in emerging markets has soured a little," another local dealer said. "So far this is a one way street for the forint (towards weakening)," the dealer added. Other central banks have also held interest rates steady even as major monetary institutions like the European Central Bank and U.S. Federal Reserve loosen policy. In the Czech case, rate setters are still debating a possible hike, although analysts widely expect rate stability ahead. The Czech crown and the Polish zloty dipped less than 0.1%, both sitting off multi-month highs hit this month. The leu was also relatively flat at 4.775 to the euro after touching its weakest since January last week. Markets expect the leu to stay on a weaker footing as a new minority government deals with plugging budget gaps. A draft bill on Tuesday showed the consolidated budget target for 2019 will be raised to 4.3% of gross domestic product from an initial estimate of 2.8%. The budget plan for 2020 will take the consolidated deficit as close to 3% of GDP as possible, Finance Minister Florin Citu said on Monday. CEE SNAPSHO AT MARKETS T 1028 CET CURRENC IES Latest Previou Daily Change s bid close change in 2019 EURCZK Czech <EURCZK 25.5120 25.5065 -0.02% +0.76% = crown => EURHUF Hungary <EURHUF 336.500 335.800 -0.21% -4.58% = forint => 0 0 EURPLN Polish <EURPLN 4.3000 4.2984 -0.04% -0.24% = zloty => EURRON Romanian <EURRON 4.7755 4.7750 -0.01% -2.54% = leu => EURHRK Croatian <EURHRK 7.4330 7.4353 +0.03% -0.31% = kuna => EURRSD Serbian <EURRSD 117.600 117.620 +0.02% +0.60% = dinar => 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 .PX Prague 1083.40 1084.56 -0.11% +9.82% 00 .BUX Budapest 43968.5 44314.4 -0.78% +12.34 9 5 % .WIG20 Warsaw <.WIG20 2189.71 2197.54 -0.36% -3.82% > .BETI Buchares 9747.73 9772.01 -0.25% +32.02 t % .SBITO Ljubljan <.SBITO 897.17 898.76 -0.18% +11.55 P a P> % .CRBEX Zagreb <.CRBEX 2003.64 1993.75 +0.50% +14.57 > % .BELEX Belgrade <.BELEX 764.77 764.77 +0.00% +0.40% 15 15> .SOFIX Sofia <.SOFIX 548.25 548.62 -0.07% -7.77% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 1.4250 -0.0200 +206bp -2bps RR RR> s CZ5YT= 5-year <CZ5YT= 1.2980 0.0920 +190bp +10bps RR RR> s CZ10YT <CZ10YT 1.4920 0.0100 +185bp +2bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 1.3900 -0.0140 +202bp -1bps RR RR> s PL5YT= 5-year <PL5YT= 1.7680 -0.0210 +237bp -1bps RR RR> s PL10YT <PL10YT 2.0390 -0.0130 +240bp +0bps =RR 10-year =RR> s FORWARD RATE AGREEME NT 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 2.24 2.24 2.15 2.18 Rep ><PRIBO R=> Hungary <HUFFRA 0.23 0.25 0.29 0.18 ><BUBOR => Poland <PLNFRA 1.73 1.71 1.66 1.71 ><WIBOR => Note: are for ask FRA prices quotes ******************************************** ****************** (Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Luiza Ilie in Bucharest; Editing by Jan Harvey)

CEE MARKETS-Romanian leu outperforms on presidential election, deficit risks ahead

25 Nov 2019

By Krisztina Than and Luiza Ilie BUDAPEST/BUCHAREST, Nov 25 The Romanian leu outperformed other currencies in Central Europe on Monday after centrist President Klaus Iohannis won a second term on Sunday, but analysts expect the country's swelling deficits might put pressure on the leu going ahead. While Iohannis' election with a strong popular backing is seen reducing political risk, the Romanian government faces the challenge of tackling a budget deficit expected to overshoot the European Union's ceiling of 3% of economic output, while the economy is slowing. Romania's consolidated budget deficit could exceed 4% of gross domestic product this year, well above target, if the government doesn't quickly introduce additional fiscal measures, Finance Minister Florin Citu has said. The current account deficit is also on the rise. "Investors have a lot to watch going forward, both in very short-term and in the medium term," Raiffeisen said in a daily note. "With presidential elections out of the agenda, the government will have to make clear its plans regarding the fiscal policy for 2020... Also, talks about early parliamentary elections should emerge as a key point on the political agenda starting as of this moment." By 0847 GMT, the leu traded 0.1% higher on the day against the euro at 4.7715, while other currencies were flat. The unit has fallen 2.5% this year so far, the region's second-worst performer after the Hungarian forint. The forint has lost 4% so far this year and is also drifting just off record lows past 336 versus the euro hit in September, as the central bank sticks to its loose monetary policy at home, and global jitters over trade wars and Brexit continue to weigh on the currency. "On Friday, the EUR/HUF exchange rate again approached 336 but bounced off from there and firmed to 334.40 this morning," Erste analysts said in a note. The forint has been see-sawing as it has settled in its new, weaker ranges. Better-than-expected manufacturing PMI data in the euro zone - the key trade partner for central Europe's export-dominant economies - lifted the mood on Friday but the region's fast-growing economies are still expected to slow next year. Poland, the region's biggest economy, could decelerate to around 3% in 2020 from a robust 4.3% estimated for 2019, Commerzbank analysts said. "On this outlook, we find it reasonable that the central bank expects inflation to remain tame and expects not to have to tighten monetary policy through 2020. Such a policy stance is neutral for the zloty, and would even turn supportive if the ECB were to loosen its own stance," they added. CEE SNAPSHOT AT MARKETS 0947 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.4860 25.5000 +0.05% +0.87% crown Hungary 334.4000 334.4900 +0.03% -3.98% forint Polish 4.2980 4.2969 -0.03% -0.20% zloty Romanian 4.7715 4.7770 +0.12% -2.46% leu Croatian 7.4330 7.4345 +0.02% -0.31% kuna Serbian 117.4700 117.5300 +0.05% +0.71% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1086.09 1081.900 +0.39% +10.09% 0 Budapest 44000.91 44053.95 -0.12% +12.42% Warsaw 2196.95 2188.24 +0.40% -3.50% Bucharest 9753.01 9718.49 +0.36% +32.09% Ljubljana 900.18 902.31 -0.24% +11.93% Zagreb 2004.46 2003.27 +0.06% +14.62% Belgrade <.BELEX15 762.09 764.32 -0.29% +0.05% > Sofia 549.29 551.22 -0.35% -7.60% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.3860 -0.0520 +201bps -6bps > 5-year <CZ5YT=RR 1.2650 0.0570 +186bps +5bps > 10-year <CZ10YT=R 1.4900 0.0140 +184bps +0bps R> Poland 2-year <PL2YT=RR 1.4030 0.0040 +203bps +0bps > 5-year <PL5YT=RR 1.8090 0.0170 +240bps +1bps > 10-year <PL10YT=R 2.0800 0.0330 +243bps +2bps R> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep < 2.25 2.24 2.18 2.18 PRIBOR=> Hungary < 0.24 0.27 0.30 0.18 BUBOR=> Poland < 1.73 1.73 1.71 1.71 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Gergely Szakacs; Editing by Rashmi Aich)

CEE MARKETS-Forint, crown on weaker footing over dovish central banks

15 Nov 2019

By Krisztina Than and Jason Hovet BUDAPEST/PRAGUE, Nov 15 The forint underperformed its Central European peers on Friday ahead of next week's Hungarian central bank meeting where the bank is seen sticking to its loose stance, and the Czech crown also eased despite positive sentiment on stock markets. The crown weakened to a three-week low on Friday after minutes from the central bank's Nov. 7 policy meeting sounded less hawkish than many investors expected, a Prague dealer said. The bank had voted 5-2 to leave rates on hold, with the minutes showing board members Tomas Holub and Vojtech Benda backing a 25 basis point increase to the main rate, which now sits at 2.0%. The Czech central bank is still debating tightening policy even as most of the rest of Europe maintains loose monetary stances, with the region's robustly growing economies seen slowing as the impact of a slowdown in the euro zone makes itself felt. Domestic demand in Central Europe remains very strong due to massive wage hikes, which could to some extent offset the impact if exports suffer. GDP data on Thursday from most countries in the region showed that signs of a slowdown were already visible in the third quarter of 2018. Hungary stood out as economic growth accelerated more than expected, rising to an annual 5.0% in the third quarter. * For an interactive version: https://tmsnrt.rs/2KgEAwH While the vote at the Czech rate meeting last week was the same as at a previous meeting, Holub this time joined Benda in backing a hike, meaning three central bankers have supported higher rates at the last two sittings. "A hawkish sign was Holub was voting for a hike. (But) the minutes seem dovish in some way," ING economist Jakub Seidler said. The minutes showed board members saw signs of deterioration in the domestic economy since the last meeting and that most would tolerate a "short-term" breaching of the bank's 3% upper limit on inflation. The forint fell 0.2% against the euro to 334.75 by 0935 GMT, edging towards a record low of 336.28 hit in September. Analysts at brokerage Equilor said the forint could soon test this level based on the technical picture, after the level of 333 stopped and reversed the currency's earlier gains. The National Bank of Hungary (NBH) is expected to keep interest rates unchanged at its policy meeting on Tuesday based on the unanimous forecast of 16 economists in a Reuters poll, which projects no change in official rates before 2021. The NBH has maintained its accommodative stance, warning of downside price risks due to weakening European activity. Stock markets across the region firmed on Friday, as international sentiment improved on hopes that the United States and China were close to signing a long-awaited trade deal that could end the trade war that has rattled investors' nerves this year. CEE SNAPSHOT AT MARK 1035 ETS CET CURRENCIE S Latest Previo Daily Change us bid close change in 2019 EURCZK= Czech <EUR 25.5850 25.593 +0.03 +0.48% crown CZK= 0 % > EURHUF= Hungary <EUR 334.7500 334.13 -0.18% -4.08% forint HUF= 50 > EURPLN= Polish <EUR 4.2788 4.2859 +0.17 +0.25% zloty PLN= % > EURRON= Romanian <EUR 4.7675 4.7673 -0.01% -2.38% leu RON= > EURHRK= Croatian <EUR 7.4400 7.4385 -0.02% -0.40% kuna HRK= > EURRSD= Serbian <EUR 117.2700 117.47 +0.17 +0.88% dinar RSD= 50 % > Note: calculated from 1800 daily CET change Latest Previo Daily Change us close change in 2019 .PX Prague <.PX 1085.84 1079.3 +0.60 +10.06% > 900 % .BUX Budapest <.BU 43330.21 43218. +0.26 +10.71% X> 28 % .WIG20 Warsaw <.WI 2234.79 2226.1 +0.39 -1.84% G20> 5 % .BETI Bucharest <.BE 9698.70 9692.1 +0.07 +31.35% TI> 7 % .SBITOP Ljubljana <.SB 875.60 877.08 -0.17% +8.87% ITOP > .CRBEX Zagreb <.CR 1974.23 1974.3 -0.01% +12.89% BEX> 4 .BELEX15 Belgrade <.BE 769.64 769.15 +0.06 +1.04% LEX1 % 5> .SOFIX Sofia <.SO 557.17 558.80 -0.29% -6.27% FIX> BONDS Yield Yield Spread Daily (bid) change vs change in Bund Czech spread Republic CZ2YT=RR 2-year <CZ2 1.4410 0.0810 +208b +8bps YT=R ps R> CZ5YT=RR 5-year <CZ5 1.1740 -0.043 +178b -5bps YT=R 0 ps R> CZ10YT=RR 10-year <CZ1 1.4680 0.0140 +181b +1bps 0YT= ps RR> Poland PL2YT=RR 2-year <PL2 1.3850 -0.014 +202b -2bps YT=R 0 ps R> PL5YT=RR 5-year <PL5 1.8000 0.0060 +241b +0bps YT=R ps R> PL10YT=RR 10-year <PL1 2.0790 -0.003 +242b -1bps 0YT= 0 ps RR> FORW RATE AGREEM ARD ENT 3x6 6x9 9x12 3M interbank Czech Rep <CZK 2.23 2.21 2.12 2.18 FRA> <PRI BOR= > Hungary <HUF 0.27 0.33 0.35 0.19 FRA> <BUB OR=> Poland <PLN 1.73 1.70 1.67 1.71 FRA> <WIB OR=> Note: FRA are for ask quotes prices ****************************************** ******************** (Reporting by Krisztina Than in Budapest and Jason Hovet in Prague; Editing by Hugh Lawson)

CEE MARKETS-Forint underperforms on surprise increase in inflation

08 Nov 2019

By Krisztina Than BUDAPEST, Nov 8 Hungary's forint eased on Friday versus the euro and underperformed its Central European peers as October inflation came in above expectations while the Hungarian central bank has been sticking to its ultra-loose monetary policy. Headline inflation picked up to 2.9% in October, while the central bank's key tax-adjusted inflation number also rose to 3.7% in October from 3.4% in September, data showed. "Today's data also signals ... that after the low in September, inflation started to accelerate in October and this is expected to last until the year end and it is conceivable that the headline figure will climb close to 4% at the end of the year," ING analyst Peter Virovacz said in a note. Hungary's benchmark base rate is at 0.9% while the overnight deposit rate is at -0.05%. "This is one factor in the forint's weakness ... that we have the loosest monetary policy in the region," one dealer in Budapest said. She said the forint's slide this week could also be due to technical factors. The Hungarian currency failed to firm past a key resistance at 328, and then it resumed its easing trend, falling to 333.60 on Friday. At 0954 GMT the forint was down 0.3% versus the euro, while the Czech crown and the Polish zloty were both weaker by 0.1%. The forint has eased 3.75% so far this year. Central banks in Central Europe have adopted a cautious stance lately, assessing the potential impact of a slowdown in the euro zone on economies of the eastern region of the EU. So far, the region's economic growth has been robust but there are signs of a moderation. Next week's releases in CEE countries of flash GDP data for the third-quarter are expected to signal that a slowdown is around the corner, despite solid domestic demand growth and tight labour markets, analysts at Morgan Stanley said. "Looking further ahead, we think that the slowdown in growth will become more visible, more specifically in 1H20," they said. "This is likely to add to CEE central bank concerns and will introduce further uncertainty about the growth outlook for the region. Yet, we think that domestic inflation pressures will remain in place for a while, which we think will prevent the regional central banks from turning outright dovish for a while." On Thursday, the Czech central bank kept its rates on hold, but the votes showed a continuing debate over a possible hike. The bank voted 5-2 to keep rates on hold. Czech central bank Governor Jiri Rusnok said the bank's preference to keep interest rates stable and not hike like its forecast model suggests would not lead to any substantial rise in inflation. The Czech central bank is one of the few in Europe still debating a rate hike even as the European Central Bank and U.S. Federal Reserve have already starting easing policy to safeguard their economies. Poland's central bank governor said on Wednesday he expected stable interest rates until his term ends in 2022 as the bank's policy council left borrowing costs unchanged. CEE SNAPSH AT MARKET OT 1054 S CET CURREN CIES Latest Previou Daily Change s bid close change in 2019 EURCZK= Czech <EURCZ 25.543 25.5210 -0.09% +0.64% crown K=> 0 EURHUF= Hungary <EURHU 333.60 332.835 -0.23% -3.75% forint F=> 00 0 EURPLN= Polish <EURPL 4.2628 4.2590 -0.09% +0.63% zloty N=> EURRON= Romania <EURRO 4.7610 4.7607 -0.01% -2.25% n leu N=> EURHRK= Croatia <EURHR 7.4295 7.4283 -0.02% -0.26% n kuna K=> EURRSD= Serbian <EURRS 117.44 117.410 -0.03% +0.73% dinar D=> 00 0 Note: calculated 1800 daily from CET change Latest Previou Daily Change s close change in 2019 .PX Prague 1077.3 1081.05 -0.35% +9.20% 2 00 .BUX Budapes 43186. 43598.1 -0.94% +10.34% t 40 9 .WIG20 Warsaw <.WIG2 2256.1 2272.17 -0.70% -0.90% 0> 6 .BETI Buchare <.BETI 9692.0 9680.24 +0.12 +31.26% st > 0 % .SBITOP Ljublja <.SBIT 863.13 866.98 -0.44% +7.32% na OP> .CRBEX Zagreb <.CRBE 1980.3 1975.07 +0.26 +13.24% X> 0 % .BELEX15 Belgrad <.BELE 749.60 752.63 -0.40% -1.59% e X15> .SOFIX Sofia <.SOFI 558.64 558.87 -0.04% -6.03% X> BONDS Yield Yield Spread Daily (bid) change vs change in Bund Czech spread Republi c CZ2YT=RR <CZ2YT 1.3230 0.0430 +194b +5bps 2-year =RR> ps CZ5YT=RR <CZ5YT 1.2550 0.0790 +180b +9bps 5-year =RR> ps CZ10YT=R <CZ10Y 1.6070 0.0700 +186b +8bps R 10-year T=RR> ps Poland PL2YT=RR <PL2YT 1.4130 -0.0030 +203b +0bps 2-year =RR> ps PL5YT=RR <PL5YT 1.8570 0.0080 +240b +2bps 5-year =RR> ps PL10YT=R <PL10Y 2.1680 0.0360 +243b +5bps R 10-year T=RR> ps FORWAR RATE AGREEME D NT 3x6 6x9 9x12 3M interbank Czech <CZKFR 2.29 2.31 2.31 2.18 Rep A><PRI BOR=> Hungary <HUFFR 0.27 0.31 0.36 0.19 A><BUB OR=> Poland <PLNFR 1.72 1.71 1.71 1.71 A><WIB OR=> Note: are for ask FRA prices quotes (Reporting by Krisztina Than and additional reporting by Robert Muller in Prague ; Editing by)

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04 Nov 2019

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