Edition:
United Kingdom

Sandor Peto

CORRECTED-CEE MARKETS-Currencies ease after robust economic growth spurs inflation concerns

12:14pm GMT

(Replaces graphic using correct German data series) * Q3 GDP growth faster than expected in CEE, except Czech Republic * Weak German GDP data might mean looser policies in CEE-analysts * Budapest, Warsaw stocks reverse early falls * O2 stock weighs on Prague By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Nov 14 Central European currencies eased on Wednesday as robust economic growth data from the region highlighted inflation concerns which central banks are unlikely to rush to tackle, given a contraction in Germany, the region's largest trade partner. Cautious international sentiment also weighed on the region's currencies and stocks, market participants said. The zloty eased 0.1 percent to 4.1945 versus the euro by 1001 GMT, even though third-quarter economic output data released on Wednesday showed robust 5.1 percent annual growth, a steady rate from the second quarter. Analysts had forecast 4.7 percent growth after other economic indicators seemed to predict a slowdown in the region. Data from Hungary, Romania and Slovakia showing growth of 4-5 percent were also better than expected. Only the Czechs reported lower-than-expected growth at 2.3 percent. That was more in synch with a bigger-than forecast slowdown in Germany, the region's key trade partner. Germany's economy contracted for the first time since 2015 in the third quarter as global trade disputes and problems in the auto industry hit exports. The crown briefly touched a 4-month low against the euro of 25.98 just after the data was released. The four straight rate hikes delivered by the Czech central bank (CNB) at its latest meetings have failed to strengthen the crown as investors focused on the dollar's continuing strength rather than local factors in the past months. The Czech growth figures left expectations unchanged that the CNB will increase interest rates further, particularly if the crown does not strengthen, analysts said. Weak German data might, however, lead to a delay in rate tightening by the European Central Bank and that could also make central banks overly relaxed in the eastern members of the EU, Budapest-based ING analyst Peter Virovacz said. "I do not expect any move from the NBH (National Bank of Hungary), while I fear that there will be a big (upside) surprise in inflation next year, and the bank will react too late," he said. Orsolya Nyeste, analyst of Erste in Budapest said in a note that "monetary policy should change its current extremely loose stance in the near future in order to avoid overheating of the economy." The forint was steady at 322.99 versus the euro. Stock indices in Budapest and Warsaw reversed an early decline which tracked a global trend caused by growth concerns in China and Germany. Prague's index was kept flat by a 4 percent decline in shares of telecom group O2, after MSCI dropped the stock from its Czech country index as of Nov. 30. CEE SNAPSHOT AT MARKETS 1101 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9700 25.9550 -0.06% -1.65% crown > Hungary <EURHUF= 322.9900 323.0000 +0.00% -3.74% forint > Polish <EURPLN= 4.2945 4.2885 -0.14% -2.75% zloty > Romanian <EURRON= 4.6585 4.6575 -0.02% +0.46% leu > Croatian <EURHRK= 7.4200 7.4220 +0.03% +0.14% kuna > Serbian <EURRSD= 118.1200 118.3300 +0.18% +0.32% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1078.88 1078.810 +0.01% +0.07% 0 Budapest 38442.06 38252.65 +0.50% -2.38% Warsaw 2214.65 2217.97 -0.15% -10.02% Bucharest 8586.93 8670.05 -0.96% +10.75% Ljubljana <.SBITOP 811.53 810.75 +0.10% +0.64% > Zagreb 1753.37 1760.60 -0.41% -4.86% Belgrade <.BELEX1 749.74 749.30 +0.06% -1.32% 5> Sofia 593.16 593.86 -0.12% -12.44% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.4840 0.0510 +212bps +5bps R> 5-year <CZ5YT=R 1.8270 0.0030 +202bps +2bps R> 10-year <CZ10YT= 2.1040 -0.0060 +171bps +1bps RR> Poland 2-year <PL2YT=R 1.5860 0.0070 +222bps +1bps R> 5-year <PL5YT=R 2.4600 0.0020 +265bps +2bps R> 10-year <PL10YT= 3.2260 0.0060 +283bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.46 1.99 <PRIBOR= > Hungary 0.37 0.66 1.02 0.15 Poland 1.76 1.80 1.88 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto Editing by Alexandra Hudson)

CEE MARKETS-Forint eases on caution over Italy-EU dispute, GDP

13 Nov 2018

* Markets cautious amid risks including Italy-EU dispute * Q3 GDP seen slowing * Markets seek direction after 3-day losing streak (Recasts with new comments and background) By Sandor Peto BUDAPEST, Nov 13 The forint eased on Tuesday with investors in Central Europe cautious ahead of the release of third-quarter economic output figures in the region and in the euro zone. The euro, the region's closely watched reference currency, held close to its lowest level since mid-2017, as Italy faced a deadline from the European Union (EU) to cut its budget deficit target. Central European currencies were mixed, with the forint and the leu easing 0.1 percent against the euro by 1405 GMT, while the zloty firmed 0.1 percent. Investors in the region's currency and stock markets waited for clear signs of market direction after three sessions of retreat that followed two weeks of gains, market participants said. Regional currencies may face additional pressure if Italy does not cut its deficit goal and disagreements with Brussels lead to further euro weakness, traders said. Bearish prospects for the euro, due to technical factors and worries over Italy, support a bullish view for the dollar versus Central European currencies, which may also weaken against the euro, Rabobank analyst Piotr Matys said in a note. Britain's exit from the European Union, which is also often mentioned as a risk factor, is unlikely to seriously affect the region's robustly growing economies, said Brett Diment, head of emerging debt at Aberdeen Standard Investments. "The only relevance is if it impacts the euro," he said. Analysts expect preliminary third-quarter economic output data due on Wednesday to slow. Poland's annual growth is seen declining to 4.7 percent from 5.1 percent in the second quarter, a still robust rate. Slowing growth in the euro zone, the region's main trade partner, is also a risk, market participants said. Analysts expect Wednesday's euro zone figures to show a steady 1.7 percent annual economic growth. "If GDP in the euro zone will be close to the consensus, I don't see any influence on the zloty," said Marcin Turkiewicz, currency dealer at mBank. In the region's currency markets, the forint led losses, after outperforming regional peers in the past weeks, while the crown firmed a shade. The crown has outperformed the forint and the zloty this year thanks to the Czech central bank's (CNB) gradual tightening of policy since August last year. But the euro's wobbles, coupled with dollar buying, have rendered the CNB's hikes in the past few months ineffective in further boosting the crown against its regional peers, even though the Polish and Hungarian central banks have kept their own rates at record lows. CEE SNAPSHOT AT MARKETS 1505 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9480 25.9540 +0.02% -1.56% crown > Hungary <EURHUF= 322.6400 322.2000 -0.14% -3.63% forint > Polish <EURPLN= 4.2960 4.2997 +0.09% -2.79% zloty > Romanian <EURRON= 4.6615 4.6570 -0.10% +0.39% leu > Croatian <EURHRK= 7.4225 7.4255 +0.04% +0.11% kuna > Serbian <EURRSD= 118.2400 118.2700 +0.03% +0.22% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1080.48 1081.760 -0.12% +0.22% 0 Budapest 38323.91 38108.46 +0.57% -2.68% Bucharest 8628.76 8661.23 -0.37% +11.29% Ljubljana <.SBITOP 811.73 817.69 -0.73% +0.66% > Zagreb 1758.24 1767.66 -0.53% -4.59% Belgrade <.BELEX1 749.30 744.56 +0.64% -1.38% 5> Sofia 595.30 596.08 -0.13% -12.13% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.4870 0.0070 +213bps +1bps R> 5-year <CZ5YT=R 1.8490 0.0390 +204bps +3bps R> 10-year <CZ10YT= 2.1240 0.0240 +173bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.99 <PRIBOR= > Hungary 0.38 0.67 1.03 0.15 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Karin Strohecker in London and Alicja Ptak in Warsaw; Editing by Mark Potter and Kirsten Donovan)

CEE MARKETS-Forint leads currencies lower, Italy-EU dispute weighs

13 Nov 2018

* Currencies ease as euro falls on Italy's budget deadline * Markets seek direction after 3-day losing streak * Stocks tread water, but OTP Bank lifts Budapest index By Sandor Peto BUDAPEST, Nov 13 Central European currencies eased on Tuesday amid dollar buying as the euro remained under pressure, with Italy facing a deadline from the European Union (EU) to cut its budget deficit target. Flows into the dollar due to risk aversion or expectations for more U.S. interest rate increases have often caused currency weakness in the EU's emerging markets this year. Central European currencies and stocks took a breather early on Tuesday as investors waited for clues over direction after three sessions of retreat that followed two weeks of gains. The currencies started to weaken when the euro, after an early rebound versus the dollar, turned south again. The forint, the biggest gainer in the region earlier this month, led the retreat, shedding 0.2 percent to trade at 322.9 against the euro at 1014 GMT, still not far from last week's 3-month high of 320.8. It also touched this month's weakest level versus the zloty , even though its regional peer also eased somewhat against the euro. Traders said there was no fresh news to justify this, with both the Hungarian and Polish central banks expected to keep interest rates at record lows in the next months. Regional currencies may face some additional pressure if Italy does not cut its deficit goal and disagreements with Brussels lead to further euro weakness, traders said. "GDP figures from the region (in the next days), if they indeed show a slowdown, may also trigger some reaction, but only temporarily," another trader said. Regional stock indexes, after an initial rise, trod water near Monday's closing levels, except for Budapest where the main index rose 0.7 percent. The sole cause of this was a 1.9 percent jump in the shares of Hungary's OTP to 11,210 forints, after the region's biggest independent lender reported strong earnings on Friday. Some investors were trying to boost the shares well above the 11,000-forint psychological level, Equilor brokerage analyst Zoltan Varga said. Belgrade's index rose 1.3 percent, lifted by a 6.2 percent increase in the shares of Komercijalna Banka, Serbia's biggest lender, to a 3-month high. The stock has been volatile after Serbia four weeks ago invited applications for a financial adviser to sell the government's stake in the bank. CEE SNAPSHOT AT MARKETS 1114 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9510 25.9540 +0.01% -1.58% crown > Hungary <EURHUF= 322.9000 322.2000 -0.22% -3.71% forint > Polish <EURPLN= 4.3026 4.2997 -0.07% -2.93% zloty > Romanian <EURRON= 4.6590 4.6570 -0.04% +0.44% leu > Croatian <EURHRK= 7.4225 7.4255 +0.04% +0.11% kuna > Serbian <EURRSD= 118.2500 118.2700 +0.02% +0.21% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1081.87 1081.760 +0.01% +0.34% 0 Budapest 38356.55 38108.46 +0.65% -2.59% Warsaw 2228.65 NULL #VALUE! -9.45% Bucharest 8627.16 8661.23 -0.39% +11.26% Ljubljana <.SBITOP 815.32 817.69 -0.29% +1.11% > Zagreb 1757.51 1767.66 -0.57% -4.63% Belgrade <.BELEX1 754.37 744.56 +1.32% -0.71% 5> Sofia 596.48 596.08 +0.07% -11.95% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5090 0.0290 +215bps +4bps R> 5-year <CZ5YT=R 1.8160 0.0050 +202bps +1bps R> 10-year <CZ10YT= 2.1110 0.0110 +172bps +1bps RR> Poland 2-year <PL2YT=R 1.5640 0.0150 +221bps +2bps R> 5-year <PL5YT=R 2.4560 0.0050 +266bps +1bps R> 10-year <PL10YT= 3.2220 -0.0130 +283bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.99 <PRIBOR= > Hungary 0.38 0.68 1.04 0.15 Poland 1.77 1.81 1.90 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Mark Potter)

CEE MARKETS-Forint falls and Romanian CPI decline disappoints

12 Nov 2018

* Dollar buying on Brexit worries weighs on forint * Hungarian government bond yields tick higher * Romanian bond yields mixed after repo tender, CPI data (Releads with forint easing, analyst comments, Romanian central bank tender) By Sandor Peto BUDAPEST, Nov 12 The forint eased slightly on Monday as dollar buying amid worries over Britain's talks to quit the European Union weighed on Central European currencies. The forint traded at 321.75 against the euro at 1450 GMT, down 0.1 percent. Against the dollar it touched an 11-day low at 286.31. Investors bought the greenback versus European currencies including the euro amid doubts that Britain will be able to secure a deal on quitting the EU next year. Hungarian government bond yields extended last week's slow rise, which followed weeks of falls. The 10-year yield, trading around 3.67 percent, has risen 13 basis points in the past three sessions, but was still 25 basis points below a peak one month ago. The latest government debt agency figures dated Nov. 8 showed that the forint-denominated holding of foreigners reached a 3-year high over 4 trillion forints, after a steady rise since August. Citigroup, in a note, introduced buying the dollar against the forint at 285.87, with a 295.7 target, as "a trade idea of the week". It said Hungarian government bonds had attracted renewed interest due to "the false perception of a favourable EUR price action over the past weeks", and rising concerns that Central Europe's economic growth is slowing. "We believe the biased inflow wave into HUF is not sustainable and the EURUSD weakness may be the trigger for a new USDHUF upside move," Citi said. One or two big London names have bought the bonds as financing that is cheap, with the central bank (NBH) holding short-term interest rates at record lows, while keeping markets awash in money through its fx swaps, market participants said. It has been a key issue that delayed financing from the European Union for projects pre-financed by the government has started to flow in, generating hopes for further strong inflows late this year, said Peter Virovacz, analyst of ING in Budapest. "It is even possible, that after its recent strong bond sales, (the debt agency) AKK will shift to bond repurchases in December," he said. Elsewhere in the region, the Romanian central bank (NBR) continued to pump money into interbank markets via its repo facility. Its allocations through the tenders and hopes for a fast decline in inflation helped Romanian government bond yields fall 30-40 basis points in the past weeks. Yields in the secondary market were mixed, after Romania's inflation fell to 4.3 percent in October from the region of 5 percent, but remained above expectations. "We do not rule out a hike in the (NBR's 2.5 percent) policy rate at beginning of 2019," Erste analyst Eugen Sinca said in a note. CEE SNAPSHOT AT MARKETS 1550 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9320 25.9400 +0.03% -1.50% crown > Hungary <EURHUF= 321.7500 321.4000 -0.11% -3.37% forint > Polish <EURPLN= 4.2935 4.2920 -0.03% -2.73% zloty > Romanian <EURRON= 4.6569 4.6584 +0.03% +0.49% leu > Croatian <EURHRK= 7.4260 7.4269 +0.01% +0.06% kuna > Serbian <EURRSD= 118.1700 118.3000 +0.11% +0.28% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1082.97 1089.080 -0.56% +0.45% 0 Budapest 38438.65 38586.63 -0.38% -2.38% Warsaw 2232.25 2232.25 +0.00% -9.30% Bucharest 8645.29 8657.22 -0.14% +11.50% Ljubljana <.SBITOP 817.88 811.93 +0.73% +1.43% > Zagreb 1768.18 1786.19 -1.01% -4.05% Belgrade <.BELEX1 744.56 744.56 +0.00% -2.01% 5> Sofia 595.26 597.76 -0.42% -12.13% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6100 0.1160 +226bps +13bps R> 5-year <CZ5YT=R 1.8260 0.0030 +203bps +3bps R> 10-year <CZ10YT= 2.1090 0.0000 +172bps +2bps RR> Poland 2-year <PL2YT=R 1.5490 -0.0080 +220bps +1bps R> 5-year <PL5YT=R 2.4510 -0.0070 +265bps +2bps R> 10-year <PL10YT= 3.2350 0.0000 +285bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.99 <PRIBOR= > Hungary 0.33 0.61 0.97 0.15 Poland 1.76 1.80 2.05 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Luiza Ilie in Bucharest, Sujata Rao-Coverley in London, editing by Larry King)

CEE MARKETS-Leu bucks regional decline as CPI drops less than expected

12 Nov 2018

* Romanian CPI falls but less than forecast * Leu bucks CEE fall on dollar buying caused by Brexit worry * Romanian bond yields edge higher after CPI data * Romanian central bank holds repo auction, decent bond sale seen By Sandor Peto BUDAPEST, Nov 12 The leu bucked a dollar-driven weakening of Central European currencies on Monday after data showed Romanian inflation declined less than expected in October. The forint and the zloty fell 0.1 percent against the euro by 0939 GMT, in thin trade with Polish markets closed for holiday. The Czech crown touched a four-month low at 25.974. They weakened because investors bought dollars amid doubts that Britain will be able to secure a deal on quitting the European Union next year. The impact in the region was muted relative to the dollar's gains, even though Britain is an important trade partner and a key destination for millions of Central Europeans who moved West for higher wages. "One week they say this, the other week they say that (about Brexit)," one Budapest-based currency dealer said. "Let's see the end." The leu traded higher against the euro at 4.6577 at 0939 GMT, near the six-week highs it reached on Friday. Romania's annual inflation rate fell to 4.3 percent in October from 5 percent in September. It was forecast to fall to 4.1 percent. The decline was less than the Romanian central bank had hoped for. Last week, it sounded optimistic that inflation could retreat to the top of its 1.5-3.5 percent target range soon, Erste analyst Eugen Sinca said in a note. "Under these circumstances, we do not rule out a hike in the (bank's 2.5 percent) policy rate at beginning of 2019," he said. Even before the data, Raiffeisen said in a note that the decline in inflation could help some further decline in Romanian government bond yields, because the central bank was unlikely to keep raising interest rates before the second half of 2019. But yields rose by a few basis points after the figures, with two-year debt bid at 3.77 percent, up 2 basis points. That followed a drop of 30 to 40 basis points along the Romanian yield curve in recent weeks amid hopes for lower inflation and higher real yields and liquidity injections from the NBR. The bank announced a repo auction for Monday. This could be the third straight week when it pumps money into interbank markets. Injections have supported demand for government bond sales. An auction of a new seven-year paper on Monday could also draw decent demand, though the inflation data may deter some players or push the yield a touch higher, ING analysts said in a note. CEE SNAPSHOT AT MARKETS 1039 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9400 25.9400 +0.00% -1.53% crown > Hungary <EURHUF= 321.8200 321.4000 -0.13% -3.39% forint > Polish <EURPLN= 4.2960 4.2920 -0.09% -2.79% zloty > Romanian <EURRON= 4.6577 4.6584 +0.02% +0.47% leu > Croatian <EURHRK= 7.4270 7.4269 -0.00% +0.04% kuna > Serbian <EURRSD= 118.1700 118.3000 +0.11% +0.28% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1086.70 1089.080 -0.22% +0.79% 0 Budapest 38539.47 38586.63 -0.12% -2.13% Warsaw 2232.25 2232.25 +0.00% -9.30% Bucharest 8670.09 8657.22 +0.15% +11.82% Ljubljana <.SBITOP 815.45 811.93 +0.43% +1.12% > Zagreb 1781.29 1786.19 -0.27% -3.34% Belgrade <.BELEX1 744.56 744.56 +0.00% -2.01% 5> Sofia 597.04 597.76 -0.12% -11.87% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5070 0.0130 +215bps +3bps R> 5-year <CZ5YT=R 1.8460 0.0230 +205bps +5bps R> 10-year <CZ10YT= 2.1030 -0.0060 +172bps +2bps RR> Poland 2-year <PL2YT=R 1.5660 0.0000 +221bps +2bps R> 5-year <PL5YT=R 2.4580 0.0000 +266bps +3bps R> 10-year <PL10YT= 3.2350 0.0000 +285bps +3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.99 <PRIBOR= > Hungary 0.33 0.61 0.97 0.16 Poland 1.76 1.80 2.05 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Luiza Ilie in Bucharest, editing by Larry King)

CEE MARKETS-Crown hits 4-month low as CNB sees no urgent need to hike rates

09 Nov 2018

* Fed signal of Dec rate hike weighs on CEE fx via dollar buying * Crown extends loss after cbank head suggests no rate hike in Dec * Profit taking on OTP shares on earnings report drives .BUX lower By Sandor Peto BUDAPEST, Nov 9 The Czech crown touched a 4-month low against the euro on Friday after central bank (CNB) governor Jiri Rusnok said the bank had no urgency to keep increasing interest rates. Central European currencies and equities were under pressure anyway as buyers turned to the dollar after the Federal Reserve indicated on Thursday that another rate increase was likely in December. Earlier this week the dollar was sold, buoying the region's currencies, as a strengthening of the opposition Democrats at Tuesday's midterm elections in the United States caused expectations for less fiscal stimulus and rate hikes. The region's most liquid unit, the zloty led the weakening on Friday, shedding 0.3 percent to trade at 4.2885 at 1025 GMT, retreating from a 6-week high. The crown was weaker by 0.2 percent at 25.927, off a 4-month low set at 25.97 after Rusnok's comments. Rusnok said the CNB can easily wait until its first meeting next year before deciding on another rate hike. Right after the CNB delivered its fourth straight rate hike on Nov. 1 to fight inflation, Rusnok said the bank could increase rates again in December but only if global markets pushed the crown to weaker-than-expected levels. The minutes of the meeting published on Friday said rate setters had a consensus that real interest rates should not be negative and that the main uncertainty was the crown exchange rate. Statistics figures released on Friday showed that annual inflation unexpectedly slowed to 2.2 percent in October from 2.3 percent in September, but remained above the CNB's 2 percent goal. "If koruna (the crown) starts appreciating again, we expect the CNB to deliver only one additional hike approx. in the middle of the next year, as the appreciating koruna should tighten monetary conditions sufficiently," Erste analyst Jiri Polansky said in a note. "However, if koruna remains weak, the CNB will hike three times in 2019, in our view," he added. The sour global mood equally weakened the crown and the forint, which retreated from a 3-month high reached on Thursday, even though the Hungarian central bank is seen retaining its loose policy stance despite a rise in inflation in October to near the top of its 2-4 percent target. A sell-off in global stock markets after the Fed's comments and weak Chinese data also weighed on some regional equities. Budapest's main stock index shed 0.7 percent, driven by a 2 percent fall in the shares of OTP, the region's biggest lender. Expectations for a rise in the bank's third-quarter earnings boosted the stock to a 6-month high on Thursday, and investors took profit after the earnings report was published on Friday. CEE SNAPSHOT AT MARKETS 1125 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9270 25.8780 -0.19% -1.48% crown > Hungary <EURHUF= 321.4600 320.9000 -0.17% -3.28% forint > Polish <EURPLN= 4.2885 4.2770 -0.27% -2.62% zloty > Romanian <EURRON= 4.6575 4.6570 -0.01% +0.48% leu > Croatian <EURHRK= 7.4275 7.4303 +0.04% +0.04% kuna > Serbian <EURRSD= 118.3100 118.3600 +0.04% +0.16% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1087.74 1085.950 +0.16% +0.89% 0 Budapest 38427.45 38713.45 -0.74% -2.41% Warsaw 2242.34 2262.84 -0.91% -8.89% Bucharest 8612.39 8571.53 +0.48% +11.07% Ljubljana <.SBITOP 808.10 812.93 -0.59% +0.21% > Zagreb 1787.55 1785.70 +0.10% -3.00% Belgrade <.BELEX1 745.31 749.36 -0.54% -1.91% 5> Sofia 594.77 595.00 -0.04% -12.20% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6240 0.1270 +224bps +13bps R> 5-year <CZ5YT=R 1.8360 0.0100 +200bps +3bps R> 10-year <CZ10YT= 2.1110 0.0040 +168bps +3bps RR> Poland 2-year <PL2YT=R 1.5870 0.0060 +221bps +1bps R> 5-year <PL5YT=R 2.5030 0.0070 +267bps +3bps R> 10-year <PL10YT= 3.2460 -0.0030 +282bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.98 <PRIBOR= > Hungary 0.33 0.61 0.97 0.16 Poland 1.78 1.84 1.92 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Angus MacSwan)

CEE MARKETS-Bond auctions draw strong demand despite Hungary's CPI rise

08 Nov 2018

* Hungary's CPI unexpectedly rises in Oct, lifting yields * Budapest, Bucharest high-yielding bond sales draw strong demand * Serbian central meets, holds fire (Recasts with Hungary's and Romania's bond auctions, rise in Romanian central bank's inflation forecast, new comments) By Sandor Peto and Radu-Sorin Marinas BUDAPEST/BUCHAREST, Nov 8 Hungarian bond yields rose after inflation unexpectedly picked up in October to its highest level in almost six years, fuelling demand at the government's bi-weekly auctions on Thursday. A bond auction was also well-bid in Romania, where bonds offer an even higher yield premium over euro zone peers, then Hungary. Yields even dropped in Bucharest's secondary market, even though the central bank (NBR) slightly increased its inflation forecasts for 2019 to 2.9 percent. That is still within its 1.5-3.5 percent target range and well below this year's levels around 5 percent. The revision had been priced in, ING analyst Ciprian Dascalu said. Interbank markets are awash in money both in Budapest, where the central bank (NBH) keeps its base rate at record lows of 0.9 percent, and in Bucharest where the bank injected funds into markets via its repo auctions in the past weeks. Romania's 2-year bond yield was bid at 3.78 percent in the secondary market, down 4 basis points. The 10-year Romanian yield was bid at 4.75 percent at 1348 GMT, down 21 basis points, but still 430 basis points above the corresponding Bunds. Hungary's 10-year yield rose 9 basis points to 3.64 percent, after statistics showed a surprise rise in annual inflation to 3.8 percent in October, near the top of the NBH's 2-4 percent target range, from September's 3.6 percent. The country's 2020-expiry bond yields rose by only 1-2 basis points to around 1 percent. But one of the steepest yield curves in the world can flatten next year if the NBH starts to reverse its monetary stimulus, one Budapest-based trader said. "Yields may be attractive, given the risks attached to euro zone bonds, including Italy's budget and (German Chancellor Angela) Merkel's future," the trader said. A rise in volatile energy prices have helped inflation pick up across the region even though its robust economic growth shows the signs of slowing. The NBH said its underlying inflation measures also showed a pick-up in October, but market participants said it was unlikely to start to tighten policy before next year. The forint briefly touched a 3-month high of 320.9 against the euro just after the inflation figures. Elsewhere in the region, the dinar firmed a shade as the Serbian central bank met. It is expected to keep its benchmark rate on hold at 3 percent. Regional stock indices were mixed, driven by earnings reports. Weaker than expected results drove Hungarian pharmaceuticals Richter down by 2.3 percent, while oil group MOL gained 1.7 percent and Czech lender Komercni Banka firmed by 2 percent. CEE SNAPSHOT AT MARKETS 1501 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9000 25.8810 -0.07% -1.38% crown > Hungary <EURHUF= 321.1900 321.4000 +0.07% -3.20% forint > Polish <EURPLN= 4.2865 4.2885 +0.05% -2.57% zloty > Romanian <EURRON= 4.6599 4.6605 +0.01% +0.42% leu > Croatian <EURHRK= 7.4310 7.4343 +0.04% -0.01% kuna > Serbian <EURRSD= 118.2600 118.3600 +0.08% +0.20% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1082.20 1075.790 +0.60% +0.37% 0 Budapest 38309.55 38198.00 +0.29% -2.71% Warsaw 2268.44 2276.65 -0.36% -7.83% Bucharest 8680.71 8671.98 +0.10% +11.96% Ljubljana <.SBITOP 812.93 807.33 +0.69% +0.81% > Zagreb 1786.31 1783.95 +0.13% -3.07% Belgrade <.BELEX1 749.36 747.15 +0.30% -1.37% 5> Sofia 595.19 592.62 +0.43% -12.14% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5300 0.0550 +215bps +5bps R> 5-year <CZ5YT=R 1.8270 -0.0020 +197bps -1bps R> 10-year <CZ10YT= 2.1220 0.0040 +167bps +0bps RR> Poland 2-year <PL2YT=R 1.5830 0.0360 +220bps +3bps R> 5-year <PL5YT=R 2.4910 0.0260 +263bps +2bps R> 10-year <PL10YT= 3.2350 0.0090 +278bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.11 2.20 2.46 1.97 <PRIBOR= > Hungary 0.39 0.67 1.04 0.16 Poland 1.77 1.83 1.92 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Toby Chopra)

CEE MARKETS-Hungarian bond yields up as surprise CPI rise causes worry

08 Nov 2018

* Hungary's CPI unexpectedly rises in Oct, lifting yields * Forint briefly touches 3-month high vs euro after CPI data * Polish yields rise further slowly after CPI forecast rise * Serbian central meets, seen holding fire By Sandor Peto BUDAPEST, Nov 8 Hungarian long-term government bond yields rose and the forint reversed a firming on Wednesday after inflation unexpectedly rose in October. The rise is unlikely to trigger policy tightening from the Hungarian central bank (NBH) this year, but makes next year's outlook uncertain, analysts said. The central bank of Poland, Central Europe's biggest economy, increased its own inflation forecasts on Wednesday, but kept its loose policy stance. Hungary's annual inflation rose to 3.8 percent, near the top of the NBH's 2-4 percent target range, even though analysts had predicted an unchanged rate from October's 3.6 percent. The forint firmed to a 3-month high of 320.9 against the euro just after the figures were published, but retreated to 321.58 by 0927 GMT, down 0.1 percent from Wednesday, in line with a weakening of the zloty and the leu "It may have firmed initially because the figures may make the NBH think," one Budapest-based currency dealer said. The dealer added, though, that any monetary policy tightening was unlikely this year. One Budapest-based fixed income trader agreed. The trader said inflation concerns caused a 7 basis point rise in the yield of 10-year Hungarian government bonds in the secondary market to 3.62 percent, while low NBH rates prevent a rise at the short end of the yield curve. "At today's auctions, the bonds on offer could be sold at the current (increased) secondary market yields," the trader said. "The NBH is unlikely to overreact the figures, and this makes the yield curve steeper." Underlying inflation measures showed a pick-up in October, the bank said on its website, adding that volatile fuel and unprocessed food prices and a tobacco excise duty rise fuelled a pick-up in inflation in the autumn. ING analyst Peter Virovacz said a rise in the price of durable consumer goods was the biggest in more than two years. "It can easily happen that core inflation will reach the target line (of 3 percent) earlier than the NBH had predicted (for the middle of 2019)," he said in a note. The Polish central bank blamed power prices for the inflation rise, while its Governor Adam Glapinski repeated that record low interest rates were unlikely to rise next year, and possibly even longer. Polish bond yields extended a rise after his comments on Wednesday, and continued to rise slowly on Thursday, with the 5-year paper trading at 2.48 percent, up one basis points. Elsewhere in the region, the dinar firmed a shade as the Serbian central bank met. It is expected to keep its benchmark rate on hold at 3 percent. Regional stock indices were mixed, driven by earnings reports. Weaker than expected results drove Hungarian pharmaceuticals Richter down by about 3 percent, while oil group MOL gained 1.7 percent and Czech lender Komercni Banka firmed by 2.3 percent. CEE SNAPSHOT AT MARKETS 1027 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8530 25.8810 +0.11% -1.20% crown > Hungary <EURHUF= 321.5800 321.4000 -0.06% -3.32% forint > Polish <EURPLN= 4.2930 4.2885 -0.10% -2.72% zloty > Romanian <EURRON= 4.6631 4.6605 -0.06% +0.36% leu > Croatian <EURHRK= 7.4318 7.4343 +0.03% -0.02% kuna > Serbian <EURRSD= 118.2400 118.3600 +0.10% +0.22% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1088.18 1075.790 +1.15% +0.93% 0 Budapest 38199.43 38198.00 +0.00% -2.99% Warsaw 2271.52 2276.65 -0.23% -7.71% Bucharest 8681.80 8671.98 +0.11% +11.97% Ljubljana <.SBITOP 810.05 807.33 +0.34% +0.46% > Zagreb 1784.48 1783.95 +0.03% -3.17% Belgrade <.BELEX1 747.61 747.15 +0.06% -1.60% 5> Sofia 594.20 592.62 +0.27% -12.29% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6760 0.2010 +229bps +20bps R> 5-year <CZ5YT=R 1.8710 0.0420 +201bps +3bps R> 10-year <CZ10YT= 2.1450 0.0270 +169bps +1bps RR> Poland 2-year <PL2YT=R 1.5910 0.0440 +221bps +4bps R> 5-year <PL5YT=R 2.5020 0.0370 +264bps +3bps R> 10-year <PL10YT= 3.2300 0.0040 +277bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.11 2.20 2.45 1.97 <PRIBOR= > Hungary 0.33 0.61 0.97 0.16 Poland 1.78 1.84 1.93 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto)

CEE MARKETS-Zloty firms on U.S. vote, loose NBP stance hits Polish bonds

07 Nov 2018

* Dollar retreat on U.S. vote helps CEE currencies * Polish cbank keep rates on hold, retains loose stance * Crown misses out on firming, hits 5-month low vs forint (Adds Polish central bank decision, rise in Polish bond yields) By Sandor Peto BUDAPEST, Nov 7 The zloty reached a three-week high against the euro on Wednesday, benefiting from a retreat of the dollar on global markets, even though the Polish central bank (NBP) reaffirmed its loose policy stance. The dollar fell after significant gains in U.S. midterm elections by the opposition Democrats, giving them the opportunity to block President Donald Trump's agenda, which may result in less economic stimulus. The prospect of less fiscal stimulus would also relieve the pressure on the Fed to keep raising interest rates, making the premium for holding riskier CEE assets more rewarding. Meanwhile, the Polish central bank kept its benchmark rate on a hold at a record low 1.5 percent as expected. It said rising power prices could lift inflation above 2.5 percent, the midpoint of its target range, next year. But NBP Governor Adam Glapinski reaffirmed that interest rates should remain unchanged until the end of 2019, or possibly longer. The zloty, Central Europe's most liquid currency, still firmed by 0.4 percent to 4.2886 against the euro by 1635 GMT, benefiting from the selling of the dollar, while the forint and the leu gained 0.1 percent. The prospect of a less steep rise in U.S. interest rates also boosted stocks globally, including in Central Europe. Warsaw's bluechip stock index jumped 2.1 percent by 1635 GMT to a five-week high and Budapest's main index rose 1.4 percent to a six-month high, boosted by a 3.4 percent surge in the shares of OTP Bank. Polish bond yields extended their rise after Glapinski's prediction of unchanged interest rates possibly for years. The 10-year yield traded at 3.22 percent late in the session, up by 5 basis points from Tuesday. The Czech crown missed out on the regional currency strengthening, trading slightly weaker at 25.87 versus the euro. It even touched a 5-month low on its cross with the forint despite four straight interest rate increases by the Czech central bank (CNB), the last one delivered a week ago. Hungary's central bank, like Poland's, has kept interest rates at record lows. But the forint is oversold, while investors still hold a huge amount of positions in the crown which they bought before the CNB removed a cap on the currency last year, analysts said. "While the market positioning still makes the Czech crown vulnerable ... it seems that the market was mostly short in case of the HUF and this is technically positive for the Hungarian currency," said Radomir Jac, Chief Economist of Generali Investment CEE in Prague. CEE SNAPSHOT AT MARKETS 1735 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8700 25.8580 -0.05% -1.27% crown > Hungary <EURHUF= 321.5200 321.8400 +0.10% -3.30% forint > Polish <EURPLN= 4.2886 4.3045 +0.37% -2.62% zloty > Romanian <EURRON= 4.6600 4.6635 +0.08% +0.42% leu > Croatian <EURHRK= 7.4325 7.4375 +0.07% -0.03% kuna > Serbian <EURRSD= 118.2500 118.3600 +0.09% +0.21% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1075.79 1066.150 +0.90% -0.22% 0 Budapest 38198.00 37666.00 +1.41% -2.99% Warsaw 2276.65 2230.34 +2.08% -7.50% Bucharest 8671.98 8618.62 +0.62% +11.84% Ljubljana <.SBITOP 807.33 797.18 +1.27% +0.12% > Zagreb 1783.95 1776.39 +0.43% -3.20% Belgrade <.BELEX1 747.15 741.91 +0.71% -1.66% 5> Sofia 592.62 594.29 -0.28% -12.52% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.4750 -0.1860 +209bps -19bps R> 5-year <CZ5YT=R 1.8290 -0.0080 +198bps -1bps R> 10-year <CZ10YT= 2.1110 -0.0250 +167bps -3bps RR> Poland 2-year <PL2YT=R 1.5710 0.0240 +219bps +2bps R> 5-year <PL5YT=R 2.4770 0.0120 +263bps +1bps R> 10-year <PL10YT= 3.2260 0.0000 +278bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.97 <PRIBOR= > Hungary 0.33 0.61 0.94 0.16 Poland 1.78 1.83 1.92 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Alison Williams)

CEE MARKETS-Zloty hits 2-week high, Czech crown underperforms

07 Nov 2018

* Dollar retreat on U.S. vote helps most CEE currencies * Polish central bank seen keeping rates, loose stance on hold * Warsaw leads regional stock rally * Crown misses out on firming, hits 5-month low against the forint By Sandor Peto BUDAPEST, Nov 7 The zloty reached a two-week high against the euro, benefiting from a retreat of the dollar on global markets, even though the Polish central bank is expected to retain its loose policy at its meeting on Wednesday. The dollar fell in its major crosses, including the euro which is closely watched in Central Europe's emerging markets, after significant gains in U.S. midterm elections by the Democrats. Stocks in the region and on Western exchanges rose as the likelihood of more fiscal stimulus to the U.S. economy fell, which could mean fewer Federal Reserve interest rate increases than expected. Warsaw's bluechip stock index jumped almost 2 percent by 1031 GMT to a five-week high, led by rises of about 3 percent in the shares of banks PKO and Pekao. The indices of Budapest and Prague gained 1.2 percent. The zloty strengthened by a quarter of a percent to 4.2942 versus the euro, while the forint gained 0.1 percent to trade at 321.55, approaching three-month highs. The Polish central bank (NBP) is expected to keep its benchmark rate on hold at 1.5 percent at the meeting. Polish inflation remains below the midpoint of the NBP's 1.5-3.5 percent target range, even though the economy is seen growing robustly despite some recent signs that the pace is easing. NBP Governor Adam Glapinski said after last month's policy meeting that interest rates should remain unchanged until at least 2019, and it would be a surprise if the bank shifted to a more hawkish stance on Wednesday, analysts said. Poland's 10-year government bond yield dropped 2 basis points to 3.1565 percent, staying below the corresponding U.S. yield which shed 3 basis points to 3.181 percent. "Potential repatriation moves by USD-based bond investors – representing a significant investor group in POLGBs – is the major risk to our mildly bullish call," Raiffeisen analyst Stephan Imre said in a note The Czech crown missed out on the regional currency strengthening, trading flat at 25.86 versus the euro. It even touched a 5-month low on its cross with the forint despite four straight interest rate increases by the Czech central bank (CNB), the last one delivered a week ago. Hungary's central bank, like Poland's, has kept interest rates at record lows. But the forint is oversold, while investors still hold a huge amount of positions in the crown which they bought before the CNB removed a cap on the currency last year, analysts said. "While the market positioning still makes the Czech crown vulnerable... it seems that the market was mostly short in case of the HUF and this is technically positive for the Hungarian currency," said Radomir Jac, Chief Economist of Generali Investment CEE in Prague. CEE SNAPSHOT AT MARKETS 1131 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8600 25.8580 -0.01% -1.23% crown > Hungary <EURHUF= 321.5500 321.8400 +0.09% -3.31% forint > Polish <EURPLN= 4.2942 4.3045 +0.24% -2.74% zloty > Romanian <EURRON= 4.6611 4.6635 +0.05% +0.40% leu > Croatian <EURHRK= 7.4325 7.4375 +0.07% -0.03% kuna > Serbian <EURRSD= 118.2400 118.3600 +0.10% +0.22% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1079.35 1066.150 +1.24% +0.11% 0 Budapest 38127.91 37666.00 +1.23% -3.17% Warsaw 2273.60 2230.34 +1.94% -7.62% Bucharest 8638.43 8618.62 +0.23% +11.41% Ljubljana <.SBITOP 803.39 797.18 +0.78% -0.37% > Zagreb 1780.63 1776.39 +0.24% -3.38% Belgrade <.BELEX1 747.34 741.91 +0.73% -1.64% 5> Sofia 594.12 594.29 -0.03% -12.30% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6630 0.0020 +230bps +0bps R> 5-year <CZ5YT=R 1.8670 0.0300 +203bps +3bps R> 10-year <CZ10YT= 2.1400 0.0030 +171bps +1bps RR> Poland 2-year <PL2YT=R 1.5340 -0.0070 +217bps -1bps R> 5-year <PL5YT=R 2.4290 -0.0010 +259bps +0bps R> 10-year <PL10YT= 3.1760 -0.0030 +275bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.05 2.20 2.35 1.97 <PRIBOR= > Hungary 0.32 0.58 0.93 0.16 Poland 1.77 1.81 1.89 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (editing by David Stamp)

World News