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Radu-Sorin Marinas

CEE MARKETS-Forint softens on cenbank rate stance, stocks down

20 Nov 2019

By Radu-Sorin Marinas BUCHAREST, Nov 20 Hungary's forint traded softer on Wednesday after the central bank kept interest rates unchanged the previous day, ignoring a rise in inflation to near the top of its target range. Central Europe's worst-performing currency with a 3.7% loss versus the euro in 2019, the forint reversed its late-October rally earlier this month, and was again trading within sight of its record lows at 336 per euro hit on Sept. 27. At 1110 GMT, the unit traded at 333.3 to the euro, down 0.2 % on the day. "Combined with the recent weakness of the forint and the MNB's emphasis on data-dependent policy making, we continue to think the MNB (National Bank of Hungary) is unlikely to ease further in the December meeting," Goldman Sachs analysts said. "However, given the MNB's view that risks remain skewed to the downside, it suggests that risks to monetary policy are also skewed towards further easing," they added in a note. Other central European currencies were also softer, with the Polish zloty easing 0.17% and the Romanian leu edging down 0.1%. The Czech crown was up 0.16%, with a Prague-based dealer seeing lower liquidity as helping gains as the unit settles into a range between 25.500-25.600, with players waiting for further clues on interest rates. The Czech central bank is rare in Europe in still debating whether policy tightening is needed to fight domestic inflationary pressures. Most analysts expect rate stability through 2020. Regional stocks mostly fell, mirroring a general mode in emerging stocks as tensions flared again between Washington and Beijing, adding uncertainty over whether the two sides can end a trade dispute that is seen as a key risk to global economic growth. Warsaw led losses with a 1.1% fall, followed by Prague and Budapest with 0.4% and 0.1% respectively. CEE SNAPSHO AT 1210 MARKETS T CET CURRENC IES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.5300 25.5750 +0.18% +0.69% crown > Hungary <EURHUF= 333.180 332.9300 -0.08% -3.63% forint > 0 Polish <EURPLN= 4.2945 4.2867 -0.18% -0.11% zloty > Romanian <EURRON= 4.7780 4.7750 -0.06% -2.60% leu > Croatian <EURHRK= 7.4420 7.4420 +0.00% -0.43% kuna > Serbian <EURRSD= 117.390 117.4900 +0.09% +0.78% dinar > 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2019 Prague 1076.56 1079.7300 -0.29% +9.12% Budapest 43597.7 43618.78 -0.05% +11.39% 4 Warsaw 2179.22 2207.25 -1.27% -4.28% Bucharest 9713.89 9706.24 +0.08% +31.56% Ljubljana <.SBITOP 884.78 886.48 -0.19% +10.01% > Zagreb 1997.60 1994.41 +0.16% +14.23% Belgrade <.BELEX1 764.68 766.24 -0.20% +0.39% 5> Sofia 553.83 554.40 -0.10% -6.83% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.4140 0.0120 +205bp +2bps R> s 5-year <CZ5YT=R 1.2970 0.0530 +191bp +7bps R> s 10-year <CZ10YT= 1.4770 -0.0260 +185bp +1bps RR> s Poland 2-year <PL2YT=R 1.4000 -0.0160 +204bp -1bps R> s 5-year <PL5YT=R 1.7930 -0.0380 +241bp -2bps R> s 10-year <PL10YT= 2.0640 -0.0310 +244bp +0bps RR> s FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M interbank Czech Rep 2.25 2.25 2.18 2.18 <PRIBOR= > Hungary 0.24 0.30 0.34 0.19 Poland 1.73 1.70 1.67 1.71 Note: FRA are for ask quotes prices ************************************************ ************** (Reporting by Jason Hovet in Prague; Editing by Alex Richardson)

Incumbent Iohannis wins Romania's presidential vote, will face runoff

10 Nov 2019

BUCHAREST Romania's centrist President Klaus Iohannis, who has earned praise in the West for his anti-graft stance, won the first round of a presidential ballot on Sunday and will face former premier Viorica Dancila in a Nov. 24 runoff, exit polls showed.

CEE MARKETS-FX, leu edge up as Romania gets new centrist government

05 Nov 2019

By Radu-Sorin Marinas BUCHAREST, Nov 5 Central European currencies edged up on Tuesday, with the leu helped by a vote of confidence in Romania's new centrist government which wants to undo fiscal and judicial measures introduced by a former socialist cabinet. Prime Minister Ludovic Orban's minority cabinet will be in place until a parliamentary election in late 2020, but analysts expect it to struggle to win support from among the fragmented opposition to secure majorities for each bill. But the new cabinet will improve prospects for filling a policymaking vacuum in the European Union. The new Commission team had been due to take over on Nov. 1, but Bucharest's tug-of-war prevented it from nominating a commissioner, a delay that risked pushing the start date into December. Romania holds a presidential, two-round election starting on Sunday, with incumbent Klaus Iohannis, Orban's key political ally, seen winning re-election. "We continue to view this (leu) stability as being mostly related to the electoral context and look for an upward correction towards the end of 2019/early 2020," ING bank said. By 1000 GMT, the leu was 0.1% up at 4.7520 to the euro. It has fallen 2.1% so far this year - making it central and eastern Europe's second worst-performer - as widening deficits and delayed policymaking took their toll. The zloty, which has risen to a three-month high in recent weeks, was flat on the day at 4.2658. The Polish central bank is one of three in the region holding an interest rate meeting this week although markets expect rates to stay on hold when a decision comes on Wednesday. The Czech crown and the Hungarian forint each rose 0.1% to trade at 25.5120 and 329.18 respectively. The Czech central bank, which is one of the few banks in Europe still debating whether to raise rates even as the global mood turns to easing policy amid global trade tensions, meets on Thursday and is also likely to stay on hold. Romania is also seen holding rates at 2.50% on Wednesday, Among the region's stocks, Bucharest's blue chip index was flat, while Budapest eased 0.2%. Prague and Warsaw each rose 0.2%. CEE MARKETS SNAPSHO AT T 1135 CET CURRENC IES Latest Previous Daily Change bid close change in 2019 Czech 25.5200 25.5250 +0.02 +0.73% crown % Hungary 329.290 329.4500 +0.05 -2.49% forint 0 % Polish 4.2622 4.2665 +0.10 +0.64% zloty % Romanian 4.7528 4.7548 +0.04 -2.08% leu % Croatian 7.4450 7.4473 +0.03 -0.47% kuna % Serbian 117.340 117.4200 +0.07 #VALUE! dinar 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2019 Prague 1072.78 1069.690 +0.29 +8.74% 0 % Budapest 42724.9 42817.55 -0.22% +9.16% 7 Warsaw 2263.78 2264.06 -0.01% -0.56% Bucharest 9671.09 9650.99 +0.21 +30.98% % Ljubljana 861.98 857.83 +0.48 +7.18% % Zagreb 1986.63 1999.43 -0.64% +13.60% Belgrade 752.00 753.78 -0.24% -1.27% Sofia 554.34 554.90 -0.10% -6.75% BONDS Yield Yield Spread Daily (bid) change vs change in Bund Czech spread Republic 2-year 1.2580 0.0580 +190b +5bps ps 5-year 1.1060 0.0400 +171b +2bps ps 10-year 1.4390 0.0420 +176b +1bps ps Poland 2-year 1.3980 -0.0150 +204b -3bps ps 5-year 1.7560 0.0210 +236b +1bps ps 10-year 2.0160 0.0460 +234b +2bps ps FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interbank Czech Rep <PR 2.22 2.20 2.12 2.17 IBOR=> Hungary <BU 0.27 0.33 0.37 0.20 BOR=> Poland <WI 1.73 1.71 1.68 1.71 BOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Editing by Edmund Blair)

Romanian government wins confidence vote, key for EU policymaking

04 Nov 2019

BUCHAREST The centrist minority government of Romanian Prime Minister Ludovic Orban won a vote of confidence in parliament on Monday, improving the prospects of filling a policymaking vacuum in Bucharest and the European Union.

Brexit, Romanian politics risk extending EU policymaking vacuum

31 Oct 2019

BUCHAREST/BRUSSELS The machinations of Brexit and a political tug-of-war in Bucharest risk extending a policymaking vacuum in the European Union beyond the start of December.

Romanian centrists seek urgent budget approval, keep gap in check

24 Oct 2019

BUCHAREST Romania's centrist National Liberal Party of Prime Minister-designate Ludovic Orban wants to quickly adopt next year's budget and rein in a fiscal shortfall below the European Union's 3% threshold while strengthening courts. Expansionary fiscal and wage policies by the outgoing Social Democrat government have boosted Romania's deficits, while tax hikes, energy price caps approved without public debate, and moves to weaken the judiciary have dented investors' appetite.

CEE MARKETS-Currencies edge higher on Brexit deal hopes

21 Oct 2019

By Radu-Sorin Marinas BUCHAREST, Oct 21 Central European currencies edged up on Monday after the British parliament forced prime minister Boris Johnson to seek an extension to an Oct. 31 deadline for leaving the European Union, reducing expectations of a 'no deal' Brexit. Johnson's plan to put his Brexit withdrawal deal to British lawmakers on Saturday was thwarted when they voted to withhold a decision and requested him to seek a third postponement of Britain's departure from the bloc. At a rare Sunday meeting of ambassadors of the 27 states that will make up the EU after Brexit, the diplomats decided to forward Johnson's deal to the European Parliament for its required approval. By 0910 GMT, the Polish zloty and Hungary's forint each firmed about 0.2% to trade at 4.2765 and at 330.25 to the euro respectively. The Czech crown edged 0.1% up to 25.618, clinging close to three-month highs. The Romanian leu was flat. "If Boris Johnson manages to push his deal through the parliament this week, the crown may add to its gains and move close to 25.50 to euro," CSOB/KBC analysts said in a note. Elsewhere, Romania holds a tender to sell 500 million lei of June 2024 treasury bonds. "The market mood remains volatile due to Brexit uncertainties but we should see the auction filled around 3.85% (against last month's 3.91%)," ING said. Regional stocks mostly rose amid signs of progress in the United States-China trade talks, with Warsaw and Bucharest both gaining around 0.6% on the day. CEE MARKETS SNAPSHO T CURRENC IES Latest Previous Daily Change bid close change in 2019 Czech 25.6180 25.6350 +0.07% +0.35% crown Hungary 330.250 330.9000 +0.20% -2.78% forint 0 Polish 4.2765 4.2846 +0.19% +0.31% zloty Romanian 4.7595 4.7556 -0.08% -2.22% leu Croatian 7.4390 7.4425 +0.05% -0.39% kuna Serbian 117.480 117.6200 +0.12% +0.70% dinar 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2019 Prague 1046.39 1042.9000 +0.33% +6.06% Budapest 40761.5 40826.33 -0.16% +4.15% 3 Warsaw 2176.21 2164.75 +0.53% -4.41% Bucharest 9597.33 9539.91 +0.60% +29.98% Ljubljana 871.66 875.13 -0.40% +8.38% Zagreb 2016.47 2013.05 +0.17% +15.31% Belgrade 751.00 748.57 +0.32% -1.40% Sofia 562.26 564.83 -0.46% -5.42% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year 1.2370 -0.0800 +189bp -9bps s 5-year 1.0780 -0.0500 +170bp -8bps s 10-year 1.4420 0.0360 +179bp -1bps s Poland 2-year 1.4980 -0.0080 +215bp -2bps s 5-year 1.7870 0.0240 +240bp -1bps s 10-year 2.0570 0.0390 +240bp +0bps s FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M interban k Czech Rep <PR 2.29 2.25 2.18 2.18 IBOR=> Hungary <BU 0.30 0.32 0.36 0.21 BOR=> Poland <WI 1.72 1.69 1.67 1.71 BOR=> Note: FRA are for ask prices quotes **************************************************** ********** (Reporting by Alan Charlish in Warsaw, Robert Muller in Prague; writing by Radu Marinas; Editing by Alexander Smith)

CEE MARKETS-Zloty leads FX losses, ECJ ruling may pressure Polish banks

07 Oct 2019

By Radu-Sorin Marinas BUCHAREST, Oct 7 Central European currencies edged lower on Monday, led by the zloty, following a consumer-friendly court ruling on Polish mortgages held in Swiss francs that has raised concerns over the impact on Polish banks. The European Court of Justice (ECJ) ruled last Thursday that consumers may ask courts to convert their mortgage loans into the zloty currency, raising the prospect of Polish banks having to refund customers. "This week, the exchange rate should fluctuate around 4.35 (zlotys to the euro). The ruling is likely to result in an increase in the number of court cases. This means a permanent pressure on the zloty," ING said in a note. Economists expect this to force banks to establish reserves gradually and partially hedge positions resulting from a possible revaluation of loans. Rate-setter Eugeniusz Gatnar, who said the ruling would not have any major negative impact on the stability of the banking sector, estimated that Polish banks would face costs of 20 billion to 30 billion zlotys ($5.1-$7.6 billion). Poland is also facing a parliamentary election next Sunday but this should not lead to further volatility for the local currency, ING added. By 0930 GMT, the zloty eased 0.3% to trade at 4.3318 to the euro. The Hungarian forint and the Czech crown were both 0.2% weaker against the common currency, while the Romanian leu was flat on the day. A Reuters poll showed Central Europe's leading currencies should firm over the next year, lifted by solid growth once global worries have calmed, although the expected gains will be less than previously forecast. Elsewhere, Czech industrial output fell by a less than expected 1.2% year-on-year in August, as firm car production helped to offset a drop in the manufacturing of computer and electronic products, statistics office data showed. Analysts said the data was unlikely to encourage the Czech central bank to raise rates next month. "While we find industrial data is not so bad... we find the new data does not support (a move by) the CNB to hike rates in November," said Citi economist Jaromir Sindel. CEE MARKETS SNAPSHO AT T 1110 CET CURRENC IES Latest Previou Daily Change s bid close change in 2019 Czech 25.7590 25.7290 -0.12% -0.20% crown Hungary 333.000 332.500 -0.15% -3.58% forint 0 0 Polish 4.3340 4.3200 -0.32% -1.02% zloty Romanian 4.7466 4.7469 +0.01 -1.95% leu % Croatian 7.4210 7.4195 -0.02% -0.15% kuna Serbian 117.490 117.520 +0.03 +0.69% dinar 0 0 % Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 Prague 1004.25 1004.56 -0.03% +1.79% 00 Budapest 39812.8 39826.5 -0.03% +1.72% 8 1 Warsaw 2116.28 2121.16 -0.23% -7.04% Bucharest 9467.31 9441.52 +0.27 +28.22% % Ljubljana 864.30 862.56 +0.20 +7.47% % Zagreb 1926.69 1926.57 +0.01 +10.17% % Belgrade 746.31 747.71 -0.19% -2.02% Sofia 563.13 563.02 +0.02 -5.27% % BONDS Yield Yield Spread Daily (bid) change vs change in Bund Czech spread Republic 2-year 1.2720 -0.0030 +203b +0bps ps 5-year 1.0500 -0.0790 +187b -7bps ps 10-year 1.2860 0.0010 +188b +1bps ps Poland 2-year 1.4830 -0.0120 +224b -1bps ps 5-year 1.6330 -0.0230 +245b -2bps ps 10-year 1.8810 -0.0220 +248b -1bps ps FORWARD RATE AGREEME NT 3x6 6x9 9x12 3M interbank Czech Rep <PR 2.25 2.20 2.05 2.17 IBOR=> Hungary <BU 0.26 0.28 0.30 0.21 BOR=> Poland <WI 1.73 1.70 1.67 1.72 BOR=> Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Alicja Ptak in Warsaw and Jason Hovet in Prague; Editing by Gareth Jones)

CEE MARKETS-Romanian stocks rise after FTSE Russell upgrade, regional currencies ease

27 Sep 2019

By Radu-Sorin Marinas BUCHAREST, Sept 27 Central European stock markets rose on Friday with Bucharest hitting an 11-year high after FTSE Russell announced it would assign Romanian equities "secondary emerging" market status from September 2020. Romania's blue chip index rose about 1.0% to 9,659.39, its highest since January 2008, helped by the upgrade from its current "frontier" status. By 0930 GMT, Prague and Warsaw were each up 0.5% on the day, with Budapest rising 0.7%. "Romania's capital markets is joining a more select club of bourses, equivalent to investment grade ... and from now it has a chance to contribute more to boost (the) capitalisation of our economy," Finance Minister Eugen Teodorovici said. The Bucharest Stock Exchange has 84 companies on its main market, with a combined capitalization of 36 billion euros ($39 billion), just a fraction of Warsaw's 250 billion euros where 351 firms are listed. Regional currencies weakened, mirroring the euro's falls, with Hungary's forint leading losses to hit a fresh record low. The single currency held at its lowest level in more than two years. The forint, which has lost about 4.5% versus the euro since the start of the year, dropped to as low as 336.28, and bounced back marginally to trade 0.2% weaker on the day, at 335.89 to the euro at 0901 GMT. "Tuesday's bounce following the central bank rate meeting proved to be short-lived," said a trader in Budapest. "The dollar is strengthening, Hungarian interest rates are low." A weak European economy and uncertainty about the terms of Brexit together with labour shortages in central Europe and the prospect of a slowing economy - all weigh in, the trader added. The Hungarian central bank had projected lower inflation and an economic slowdown and shifted to a more dovish stance on Tuesday, when it left interest rates at the lowest in Central Europe. CEE SNAPSHOT AT MARKETS 1150 CET CURRENCIES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.8580 25.8300 -0.11% -0.58% crown > Hungary <EURHUF= 336.0700 335.2500 -0.24% -4.46% forint > Polish <EURPLN= 4.3888 4.3850 -0.09% -2.26% zloty > Romanian <EURRON= 4.7500 4.7461 -0.08% -2.02% leu > Croatian <EURHRK= 7.4095 7.4070 -0.03% +0.01% kuna > Serbian <EURRSD= 117.3900 117.4400 +0.04 +0.78% dinar > % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2019 Prague 1043.51 1037.100 +0.62 +5.77% 0 % Budapest 40789.56 40534.28 +0.63 +4.22% % Warsaw 2183.94 2172.47 +0.53 -4.07% % Bucharest 9627.50 9528.24 +1.04 +30.39% % Ljubljana <.SBITOP 858.82 856.41 +0.28 +6.78% > % Zagreb 1981.14 1959.70 +1.09 +13.29% % Belgrade <.BELEX1 753.79 758.44 -0.61% -1.04% 5> Sofia 569.72 573.68 -0.69% -4.16% BONDS Yield Yield Spread Daily (bid) change vs change in Bund Czech spread Republic 2-year <CZ2YT=R 1.2990 -0.0430 +204b -4bps R> ps 5-year <CZ5YT=R 1.0850 -0.0850 +187b -9bps R> ps 10-year <CZ10YT= 1.3310 0.0050 +191b +1bps RR> ps Poland 2-year <PL2YT=R 1.4810 -0.0190 +222b -1bps R> ps 5-year <PL5YT=R 1.7830 -0.0110 +257b -1bps R> ps 10-year <PL10YT= 2.0050 -0.0030 +259b +0bps RR> ps FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interbank Czech Rep 2.16 2.09 2.11 2.15 <PRIBOR= > Hungary 0.27 0.30 0.34 0.21 Poland 1.73 1.69 1.65 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 0.9156 euros) (Additional reporting by gergely Szakacs in Budapest and Alan Charlish in Warsaw; Editing by Susan Fenton)

CEE MARKETS-CEE FX eyes ECB stimulus news, forint regains some ground

12 Sep 2019

By Radu-Sorin Marinas BUCHAREST, Sept 12 Central European currencies firmed early on Thursday with Hungary's forint recovering some ground on hopes of fresh stimulus by the European Central Bank after it hit a record low of 333.46 to the euro the previous day. The ECB is widely expected to introduce a package of monetary easing and stimulus measures on Thursday to offset the effects of a U.S.-Chinese trade war and global economic slowdown. "The forint reached a new all-time low versus the euro in Wednesday afternoon trading, and then it rebounded somewhat," said brokerage Equilor. "The exchange rate could move in the range between 330 and 334 to the euro, but we are preparing for bigger movements between 1300 and 1600 CET (due to the ECB)." By 0850 GMT, the forint rose 0.3% on the day to trade at 331.32 to the euro. The Polish zloty and the Czech crown edged up 0.1% to 4.3377 and 25.8850 respectively. The Romanian leu was flat at 4.7365. Prime Minister Viktor Orban's cabinet chief Gergely Gulyas said the government had no exchange rate target when asked about the forint's slide. "I don't think the current exchange rate would give reason for any concerns," he said. Czech National Bank Vice-Governor Marek Mora said ECB's monetary easing would be an anti-inflationary factor for the Czech economy but that, at this moment, it was better to have a "wait-and-see" approach to Czech rates. Mora added that Czech interest rates should stay steady over the next year to keep domestic inflationary pressures under control even as global central banks shift towards easing rates. In Poland, which ended an easing cycle in March 2015, the Monetary Policy Council on Wednesday kept its benchmark rate at a record low of 1.5%, matching expectations in a Reuters poll. In Romania, the finance ministry plans to sell 600 million lei worth of August 2022 treasury bonds. "Today's auction should attract good demand as the tenors suit a broad range of investors. We expect an average allocation towards the lower end of the secondary market levels of 3.41%. Otherwise, the market will likely wait for the outcome of the European Central Bank meeting today," ING said in a note. CEE SNAPSHOT AT 1050 MARKETS CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.8850 25.8950 +0.04% -0.69% crown Hungary 331.6400 332.7200 +0.33% -3.18% forint Polish 4.3377 4.3421 +0.10% -1.11% zloty Romanian 4.7365 4.7358 -0.01% -1.74% leu Croatian 7.3905 7.3923 +0.02% +0.26 kuna % Serbian 117.4200 117.6000 +0.15% +0.75 dinar % Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1041.72 1043.5700 -0.18% +5.59 % Budapest 40141.28 40202.61 -0.15% +2.56 % Warsaw 2198.64 2189.21 +0.43% -3.43% Bucharest 9239.93 9228.59 +0.12% +25.1 4% Ljubljana 849.20 849.69 -0.06% +5.59 % Zagreb 1879.02 1880.09 -0.06% +7.45 % Belgrade 756.65 759.36 -0.36% -0.66% Sofia 578.91 578.22 +0.12% -2.62% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year 1.1280 -0.0820 +194bps -8bps 5-year 1.0910 -0.0910 +195bps -8bps 10-year <CZ10YT=RR 1.3850 0.0000 +197bps +2bps > Poland 2-year 1.5560 -0.0270 +237bps -3bps 5-year 1.8310 -0.0140 +269bps -1bps 10-year <PL10YT=RR 2.0620 -0.0110 +264bps +1bps > FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M interb ank Czech Rep <P 2.10 1.99 1.87 2.14 RIBOR=> Hungary <B 0.26 0.28 0.32 0.22 UBOR=> Poland <W 1.74 1.70 1.68 1.72 IBOR=> Note: FRA are for ask prices quotes ****************************************************** ******** (Additional reporting by Krisztina Than in Budapest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Edmund Blair)

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