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Sandor Peto

CEE MARKETS-Sterling helps, German PMI knocks down CEE currencies

22 Mar 2019

* Sterling rebound helps, German PMI knocks down CEE currencies * Forint falls to 9-day low from Thursday's 11-month high * Weak German figures question Hungarian central bank tightening By Sandor Peto BUDAPEST, March 22 Central European currencies reversed early gains on Friday after weak manufacturing data from Germany, a motor of economic growth in the European Union, knocked the euro down. Germany is the biggest export market of economies in the EU's eastern wing. Slowdown in Germany cuts the odds of monetary tightening in the euro zone, which in turn reduces pressure on rate setters in Central Europe to raise their own rates. Regional currencies firmed in early trade as the sterling recovered overnight after the EU gave British Prime Minister Theresa May a two-week reprieve, until April 12, to decide how to leave the EU. But regional currencies sharply changed their direction after the euro plunged due to the March German figures which showed a contraction in manufacturing for the third month in a row. Sentiment in emerging markets also soured due to a plunge by the lira amid political tension between Turkey and the United States, one Budapest-based dealer said. The forint was worst hit in Central Europe. It weakened by 0.4 percent to 316.1 against the euro by 0925 GMT. That was a 9-day low, and more than one percent weaker then an 11-month high set on Thursday at 312.65. It is still 2.6 percent firmer from this year's lows after a rally in the past two months due to expectations that a rise in core inflation would lead to the first monetary tightening since 2011 at the Hungarian central bank's (NBH) March 26 meeting. The majority of analysts in a March 14-21 Reuters poll projected an increase in the bank's -0.15 percent overnight deposit rate. A dovish guidance from the Federal Reserve on Wednesday and Friday's weak German data, however, question that, dealers said. "Whatever the NBH will do on Tuesday, will not be more than symbolic," another Budapest-based currency dealer said. A decline in government bond yields in developed markets is likely to support a further fall in Hungarian market yields after a slump in the past days, one fixed income trader said. "10-year swaps are at 2.05 percent, down from 2.3... and may soon dip below 2 percent," the trader added. Elsewhere, the zloty and the Czech crown eased 0.2 percent against the euro. Forward rate agreements price in no change in Czech central bank (CNB) interest rates at its March 28 meeting, but they see a 50 percent chance that rate increases could continue in the summer months. Polish government bond yields dropped by 1-2 basis points, with the 10-year paper trading at 2.8665 percent. CEE SNAPSHOT AT MARKETS 1025 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7100 25.6710 -0.15% -0.01% crown > Hungary <EURHUF= 316.1000 314.8500 -0.40% +1.58% forint > Polish <EURPLN= 4.2928 4.2850 -0.18% -0.07% zloty > Romanian <EURRON= 4.7570 4.7570 +0.00% -2.17% leu > Croatian <EURHRK= 7.4195 7.4153 -0.06% -0.13% kuna > Serbian <EURRSD= 117.8600 117.9600 +0.08% +0.37% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1077.77 1078.390 -0.06% +9.25% 0 Budapest 41845.22 41955.75 -0.26% +6.91% Warsaw 2338.03 2359.02 -0.89% +2.70% Bucharest 8067.42 8047.89 +0.24% +9.26% Ljubljana <.SBITOP 874.58 875.50 -0.11% +8.74% > Zagreb 1790.26 1783.77 +0.36% +2.37% Belgrade <.BELEX1 729.97 731.72 -0.24% -4.16% 5> Sofia 585.57 585.98 -0.07% -1.50% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8470 0.0820 +241bps +10bps R> 5-year <CZ5YT=R 1.8100 0.0150 +223bps +4bps R> 10-year <CZ10YT= 1.8880 0.0140 +188bps +5bps RR> Poland 2-year <PL2YT=R 1.6410 -0.1130 +220bps -10bps R> 5-year <PL5YT=R 2.2120 -0.0260 +263bps +0bps R> 10-year <PL10YT= 2.8840 -0.0210 +288bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.15 2.19 2.20 2.03 <PRIBOR= > Hungary 0.29 0.45 0.61 0.14 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto)

CEE MARKETS-Forint, yields fall as dovish Fed may curb rate hike appetite

21 Mar 2019

* Forint gives up some ground after dovish Fed comments * Fed may cut odds of Hungary deposit rate hike -dealers * Hungarian 5-year bonds yield falls to 9-month low * Hard Brexit, U.S. economic slowdown are risks -analysts (Recasts with fall in Hungarian bond yields, new dealer and analyst comments) By Sandor Peto BUDAPEST, March 21 The forint and Hungarian government bond yields fell on Thursday as the U.S. Federal Reserve's dovish forward guidance reduced expectations the National Bank of Hungary (NBH) will tighten monetary policy at its meeting next week. A lower trajectory for U.S. interest rates and a weaker dollar are generally positive for currencies in the European Union's emerging east but they may dissuade the Hungarian and Czech central banks not to tighten policy when their policymakers meet on March 26 and 28, respectively. The dollar meanwhile regained composure on Thursday. Investors have in recent weeks scaled back forecasts that the Czech bank would raise rates again at its next meeting, to be held just a day before Britain will leave the EU if Brexit is not delayed. But some analysts in a Reuters poll forecast that a rise in core inflation will force the Hungarian central bank to hike next week for the first time since it started to lower its base rate in 2012. It may raise its 0.15 percent overnight deposit rate. After a rally in the last two months fuelled by the monetary tightening expectations, the forint was trading at 314.25 against the euro at 1350 GMT, weaker by 0.1 percent and off Wednesday's 11-month high of 312.65. Hungarian government bond yields fell 8-10 basis points, more than their regional peers or German Bunds, with the five-year benchmark paper trading at 2.05 percent, a nine-month low. "The Fed surprised on the dovish side ... and people wonder now if the NBH will back out from tightening," one Budapest-based trader said. "In the case of Polish yields (which did not drop), the central bank there had not been expected to tighten policy anyway," the trader added. The zloty was the only currency in the region that benefited from the dovish Fed comments. It touched a seven-week high of 4.2775 against the euro before trading at 4.2781, firmer by 0.15 percent on the day. After a batch of strong economic data this week, Poland on Thursday reported a robust rise in retail sales in February. The data confirming flourishing consumption suggest strong economic growth of 4.7-4.8 percent in the first quarter, Erste analyst Katarzyna Rzentarzewska said in a note. But the risks of a recession in the United States and a chaotic no-deal Brexit are likely to keep a lid on Central European currencies, Rabobank analysts said in a note. "In the coming days market confidence that the negative scenario of a hard Brexit will be avoided could weaken substantially, causing a sell-off in the Polish zloty and its peers versus the dollar and to a lesser degree against the euro," they said. CEE SNAPSHOT AT MARKETS 1450 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6510 25.6410 -0.04% +0.22% crown > Hungary <EURHUF= 314.2500 313.9500 -0.10% +2.18% forint > Polish <EURPLN= 4.2781 4.2846 +0.15% +0.27% zloty > Romanian <EURRON= 4.7575 4.7550 -0.05% -2.18% leu > Croatian <EURHRK= 7.4180 7.4150 -0.04% -0.11% kuna > Serbian <EURRSD= 117.9000 117.8800 -0.02% +0.34% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1076.17 1073.370 +0.26% +9.08% 0 Budapest 41861.89 41964.35 -0.24% +6.96% Warsaw 2353.58 2351.83 +0.07% +3.38% Bucharest 8066.67 8018.97 +0.59% +9.25% Ljubljana <.SBITOP 875.50 875.76 -0.03% +8.86% > Zagreb 1785.80 1787.48 -0.09% +2.12% Belgrade <.BELEX1 731.72 728.10 +0.50% -3.93% 5> Sofia 587.89 588.88 -0.17% -1.11% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.7960 0.0200 +234bps +3bps R> 5-year <CZ5YT=R 1.7940 -0.0330 +218bps -1bps R> 10-year <CZ10YT= 1.8820 -0.0600 +184bps -2bps RR> Poland 2-year <PL2YT=R 1.6330 -0.1110 +217bps -10bps R> 5-year <PL5YT=R 2.2330 0.0040 +262bps +3bps R> 10-year <PL10YT= 2.9030 0.0010 +286bps +4bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.16 2.22 2.25 2.03 <PRIBOR= > Hungary 0.31 0.47 0.63 0.14 Poland 1.73 1.73 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto Editing by Catherine Evans)

Hungarian central bank may raise overnight rate; analysts divided: Reuters Poll

21 Mar 2019

BUDAPEST Hungary's central bank may raise interest rates on March 26 for the first time since it started lowering rates nearly seven years ago, according to analysts in a monthly Reuters poll.

CEE MARKETS-Forint retreats from 11-month high on Brexit, Fidesz worries

20 Mar 2019

* Forint falls from 11-month high on Brexit, Fidesz fears * Crown eases as rate hike bets are reduced * Poland releases robust industrial output data, zloty firms * Romanian minister pledges lower bank tax, stocks rise (Recasts with forint retreat, concerns over Brexit and Hungarian ruling party, new comments) By Sandor Peto BUDAPEST, March 20 The forint sharply reversed a rise to 11-month highs against the euro on Wednesday, reflecting concerns of Britain quitting the European Union without a deal and of Hungary's ruling party Fidesz leaving the bloc's centre-right parliamentary grouping. The forint traded at 313.8 by 1356 GMT against the euro, shedding 0.3 percent in its biggest daily drop for weeks. In early trade it set an 11-month high at 312.65, due to expectations for dovish comments from the Federal Reserve later in the day and monetary tightening by the Hungarian central bank next week. But it subsequently suffered a sharp reversal. Hungarian Prime Minister Viktor Orban's chief of staff said the ruling Fidesz party would quit the European People's Party, a European conservative parliamentary grouping, if the latter suspends the membership of Fidesz at a meeting on Wednesday. Coupled with the latest Brexit concerns the threat of a European parliamentary dispute created an uncertain backdrop for the forint. The Czech crown eased 0.1 percent to 25.655 versus the euro, as bets for a Czech central bank rate hike on March 28, a day before the official date of Brexit, diminished. Morten Lund, an analyst with Nordea Markets, said the crown was the most vulnerable currency in the region to any bad news about Britain's exit from the EU. "In terms of exports and value-added it is Poland which has the highest share, but when you dig into sector compositions, the Czech Republic, they are vulnerable," Lund said. The zloty did not track the forint's retreat and traded at 4.2839 against the euro, up 0.1 percent and only a shade off its early six-week high. After releasing robust wage growth figures on Tuesday, Poland's statistics office reported a surprise pick-up in annual industrial output growth in February on Wednesday. "Slowdown seems to be nowhere close," Erste analyst Katarzyna Rzentarzewska said in a note, adding that inflation pressures remain limited despite a rise in the February annual producer price index to 2.9 percent. KBC analysts said the Polish economy, buoyed by strong consumer spending, decoupled from its slowing neighbours, Germany and the Czech Republic, and February retail sales figures due on Thursday may confirm that. Central European stocks tracked a retreat of German shares from five-month highs. But Bucharest's blue-chip index gained 1.3 percent. Rising 9 percent so far this year, it is the region's best performer in 2019 as it has partially recovered from a plunge in December when the Romanian government announced new taxes on various sectors including banks. Finance minister Eugen Teodorovici said on Wednesday that the bank tax could be lowered. CEE SNAPSHOT AT MARKETS 1456 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6550 25.6290 -0.10% +0.20% crown > Hungary <EURHUF= 313.8000 312.8800 -0.29% +2.32% forint > Polish <EURPLN= 4.2839 4.2884 +0.11% +0.13% zloty > Romanian <EURRON= 4.7604 4.7627 +0.05% -2.24% leu > Croatian <EURHRK= 7.4180 7.4135 -0.06% -0.11% kuna > Serbian <EURRSD= 117.8000 118.0850 +0.24% +0.42% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1069.92 1075.360 -0.51% +8.45% 0 Budapest 41696.01 42014.16 -0.76% +6.53% Warsaw 2346.94 2352.42 -0.23% +3.09% Bucharest 8051.99 7947.65 +1.31% +9.05% Ljubljana <.SBITOP 875.76 872.18 +0.41% +8.89% > Zagreb 1789.00 1777.03 +0.67% +2.30% Belgrade <.BELEX1 728.10 722.54 +0.77% -4.41% 5> Sofia 588.88 600.40 -1.92% -0.94% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8610 0.0800 +238bps +8bps R> 5-year <CZ5YT=R 1.8420 0.0060 +220bps +1bps R> 10-year <CZ10YT= 1.9560 0.0170 +187bps +3bps RR> Poland 2-year <PL2YT=R 1.6440 -0.1030 +216bps -11bps R> 5-year <PL5YT=R 2.2540 0.0030 +262bps +1bps R> 10-year <PL10YT= 2.9180 0.0030 +283bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.16 2.22 2.25 2.03 <PRIBOR= > Hungary 0.33 0.49 0.67 0.14 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Aaron Jude Saldanha in Bangalore Editing by Alison Williams and David Holmes)

CEE MARKETS-Forint sets new highs, Bucharest bucks stocks retreat

20 Mar 2019

* Forint, zloty firm ahead of Fed, hawkish Hungarian outlook * Crown eases to 11-month low vs forint * Poland releases robust industrial output figures * Romanian minister pledges lower bank tax, stocks rise By Sandor Peto BUDAPEST, March 20 The forint set 11-month highs on Wednesday due to expectations for dovish comments from the Federal Reserve later in the day and monetary tightening by the Hungarian central bank (NBH) next week. The forint traded at 312.7 against the euro at 0947 GMT, near an intraday- and 11-month high of 312.65, and 0.1 firmer from Tuesday. It was bid at its strongest level against the Czech crown since early May 2018, at 12.17. The crown eased 0.1 percent against the euro to 25.653 as bets for a Czech central bank rate hike on March 28 diminished. Two days before that, the NBH may start to tighten its policy more than seven years after its last base rate hike, to fight a rise in core inflation. The bank is seen tightening liquidity in domestic markets via its fx swap facility, and some investors expect a rise in its -0.15 percent overnight deposit rate. "Mainly textbook-thinking foreigners expect that," one Budapest-based currency dealer said, adding that domestic players doubted that the NBH wanted to strengthen the forint further. Hungary's benchmark 10-year bonds traded at a yield of 3.12 percent, down 11 basis points from last week as expectations for monetary tightening increased trust in long-term papers. Investors shrugged off political noise as German leader Annegret Kramp-Karrenbauer proposed suspending Hungary's ruling Fidesz party from the EU's centre-right political group. Morten Lund, an analyst with Nordea Markets said the crown was the most vulnerable in the region to any bad news about Britain's exit from the EU, due next week if it is not delayed. "In terms of exports and value added it is Poland which has the highest share but when you dig into sector compositions, the Czech Republic, they are vulnerable," he said. The international backdrop was moderately supportive, with dovish comments expected from the Federal Reserve, dealers said. "The forint firming also pulls up the zloty," the dealer said. The zloty traded at 4.285 versus the euro, a shade off 6-week highs. After releasing robust wage growth figures on Tuesday, Poland's statistics office reported a surprise pick-up in annual industrial output growth in February on Wednesday. "Slowdown seems to be nowhere close," Erste analyst Katarzyna Rzentarzewska said in a note, adding that inflation pressures remain limited despite a rise in the February annual producer price index to 2.9 percent. Central European stocks tracked a retreat of German shares from 5-month lows, but Bucharest's blue-chip index gained 1.1 percent. Romania's finance minister said a controversial bank tax would be lowered. CEE SNAPSHOT AT MARKETS 1047 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6530 25.6290 -0.09% +0.21% crown > Hungary <EURHUF= 312.7000 312.8800 +0.06% +2.68% forint > Polish <EURPLN= 4.2850 4.2884 +0.08% +0.11% zloty > Romanian <EURRON= 4.7600 4.7627 +0.06% -2.23% leu > Croatian <EURHRK= 7.4130 7.4135 +0.01% -0.04% kuna > Serbian <EURRSD= 117.8000 118.0850 +0.24% +0.42% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1070.69 1075.360 -0.43% +8.53% 0 Budapest 41753.75 42014.16 -0.62% +6.68% Warsaw 2346.45 2352.42 -0.25% +3.07% Bucharest 8031.97 7947.65 +1.06% +8.78% Ljubljana <.SBITOP 871.56 872.18 -0.07% +8.37% > Zagreb 1783.20 1777.03 +0.35% +1.97% Belgrade <.BELEX1 721.78 722.54 -0.11% -5.24% 5> Sofia 593.38 600.40 -1.17% -0.18% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8610 0.0800 +239bps +9bps R> 5-year <CZ5YT=R 1.8590 0.0220 +222bps +3bps R> 10-year <CZ10YT= 1.9690 0.0310 +188bps +4bps RR> Poland 2-year <PL2YT=R 1.6490 -0.0980 +218bps -9bps R> 5-year <PL5YT=R 2.2520 0.0010 +261bps +1bps R> 10-year <PL10YT= 2.9180 0.0030 +282bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.19 2.25 2.27 2.03 <PRIBOR= > Hungary 0.37 0.56 0.72 0.14 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Aaron Jude Saldanha in Bangalore; Editing by Alison Williams)

CEE MARKETS-Forint outperforms, Czech rate hike bets fade

19 Mar 2019

* Forint is buoyed by monetary tightening expectations * Crown is off 12-day high; rate hike bets are reduced * Budapest stocks set record high as OTP Bank rise further By Sandor Peto BUDAPEST, March 19 The forint tested 10-month highs on Tuesday, buoyed by expectations that the National Bank of Hungary ill tighten policy for the first time in seven years next week. The forint was up 0.1 percent against the euro at 313.75 by 0919 GMT. "The forint is lifted by expectations that the NBH will increase the bottom of its rate corridor slightly next week," one Budapest-based currency dealer said. Expectations for NBH tightening, fuelled by a rise in core inflation, has helped the forint rise 2.3 percent from beyond 320 late last year, making it the region's best performer in 2019. Czech markets have cut bets on another rate increase on March 28, a day after the NBH's meeting and a day before Britain's scheduled departure from the European Union. Forward rate agreements indicate only a slim chance of a Czech rate increase next week, a view reinforced on Tuesday by Czech central bank Vice-Governor Marek Mora, who said he saw zero to one rate hikes in 2019 as most likely. The Czech crown was flat at 25.621 versus the euro, off a 12-day high reached in early trade. The zloty was weaker against the euro at 4.292, but still near six-week highs it set in overnight trade, unaffected by a higher-than-expected 7.6 percent annual rise in Polish corporate wages. "We see headwinds from the global side for the next month, but then see a modest recovery in global economy, which should aide the PLN together with the still-solid performance of the domestic Polish economy," Danske Bank said in a weekly note on emerging markets. Equities gained in the region. Budapest's blue-chip index hit another record high, driven by OTP Bank. CEE SNAPSHOT AT MARKETS 1019 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6120 25.6150 +0.01% +0.37% crown > Hungary <EURHUF= 313.7500 314.0000 +0.08% +2.34% forint > Polish <EURPLN= 4.2920 4.2896 -0.06% -0.06% zloty > Romanian <EURRON= 4.7560 4.7551 -0.02% -2.14% leu > Croatian <EURHRK= 7.4155 7.4156 +0.00% -0.07% kuna > Serbian <EURRSD= 117.7400 118.0350 +0.25% +0.48% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1081.13 1076.730 +0.41% +9.59% 0 Budapest 42276.90 42085.01 +0.46% +8.02% Warsaw 2354.20 2345.84 +0.36% +3.41% Bucharest 7888.72 7883.39 +0.07% +6.84% Ljubljana <.SBITOP 872.83 872.83 +0.00% +8.53% > Zagreb 1773.70 1774.12 -0.02% +1.42% Belgrade <.BELEX1 711.39 717.34 -0.83% -6.60% 5> Sofia 586.36 586.02 +0.06% -1.36% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8640 0.0800 +239bps +8bps R> 5-year <CZ5YT=R 1.7980 0.0080 +217bps +0bps R> 10-year <CZ10YT= 1.9260 0.0030 +184bps +0bps RR> Poland 2-year <PL2YT=R 1.6300 -0.0030 +216bps +0bps R> 5-year <PL5YT=R 2.2330 0.0040 +260bps +0bps R> 10-year <PL10YT= 2.8910 -0.0020 +281bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.19 2.25 2.27 2.03 <PRIBOR= > Hungary 0.35 0.53 0.72 0.14 Poland 1.74 1.74 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Jason Hovet in Prague, editing by Larry King)

CEE MARKETS-Leu firms as Romania pledges avert threat of S&P downgrade

18 Mar 2019

* S&P affirms Romania's rating outlook, Romanian assets firm * Romania's fiscal policy remains uncertain-analysts * OTP Bank surge boosts Budapest's stock index to record high * Forint ignores threat of Hungarian ruling party ouster from EPP By Sandor Peto BUDAPEST, March 18 The leu extended gains on Monday after Standard & Poor's affirmed Romania's stable credit rating outlook on Friday, averting the threat of a downgrade over a controversial tax plan. The government appealed against a change in the rating outlook to negative early this month, and the S&P reprieve followed its pledges to change a raft of new taxes announced three months. The leu firmed 0.1 percent to 4.7545 against the euro by 0917 GMT, but it remained weaker than its 200-day moving average of 4.675. Romanian government bond yields dropped, with the 2-year yield testing 10-month lows around 3.15 percent. "Material recovery remains unlikely in our view given ongoing (fiscal) policy risks," said Raiffeisen analyst Stephan Imre in a note. Even if the government makes changes on its biting bank tax, uncertainty remains as the 2019 budget is based on too optimistic economic growth assumptions, analysts said. Sentiment in Central European markets was cautiously optimistic as investors expected dovish comments from Wednesday's Federal Reserve meeting. Stocks mostly rose in the region's main bourses including a 0.35 percent rise in Bucharest's blue-chip index. Budapest's main index led the rise, surging to record highs. It was 1.1 percent higher at 0917 GMT. Most of the rise came from an over 3 percent jump in the shares of OTP, the region's biggest independent lender. Budapest markets were closed on Friday for a national holiday, when a newspaper report in Ljubljana suggested that OTP was well positioned to buy state-owned lender Abanka, Slovenia's thrid-biggest lender. The report helped OTP stocks dash through a resistance level at 12,500 forints ($45.13), to record highs, analysts said. Trading at 12,720 forints at 0936 GMT, it may head towards the 13,000-forint psychological level, said Zoltan Varga, an analyst at Equilor brokerage. Budapest markets, including the forint, shrugged off the risk that the mainstream conservative European People's Party bloc may expel Hungarian Prime Minister Viktor Orban's Fidesz party at a meeting on Wednesday. "The odds (are) 20 percent or less," said Varga, adding that even an expulsion would not hit the forint significantly. The Hungarian currency tested the 10-month highs against the euro it reached last week amid expectations that the Hungarian central bank could start to tighten liquidity in markets at its meeting on March 26. The crown was flat, ignoring a projection from Czech rate setter Vojtech Benda that the central bank could raise interest rates three times this year if the crown remains weak. CEE SNAPSHOT AT MARKETS 1017 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6460 25.6450 -0.00% +0.24% crown > Hungary <EURHUF= 314.3000 314.3000 +0.00% +2.16% forint > Polish <EURPLN= 4.2982 4.2996 +0.03% -0.20% zloty > Romanian <EURRON= 4.7545 4.7605 +0.13% -2.11% leu > Croatian <EURHRK= 7.4140 7.4275 +0.18% -0.05% kuna > Serbian <EURRSD= 117.8300 118.0500 +0.19% +0.40% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1080.70 1070.290 +0.97% +9.54% 0 Budapest 41785.29 41335.02 +1.09% +6.76% Warsaw 2345.47 2346.25 -0.03% +3.02% Bucharest 7889.22 7861.83 +0.35% +6.85% Ljubljana <.SBITOP 869.62 861.12 +0.99% +8.13% > Zagreb 1772.89 1769.50 +0.19% +1.38% Belgrade <.BELEX1 711.13 708.61 +0.36% -6.64% 5> Sofia 582.27 583.80 -0.26% -2.05% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8140 0.0260 +235bps +3bps R> 5-year <CZ5YT=R 1.7950 0.0170 +217bps +2bps R> 10-year <CZ10YT= 1.9430 0.0460 +186bps +5bps RR> Poland 2-year <PL2YT=R 1.6350 -0.0040 +217bps +0bps R> 5-year <PL5YT=R 2.2420 0.0000 +261bps +0bps R> 10-year <PL10YT= 2.9030 0.0010 +282bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.19 2.23 2.24 2.03 <PRIBOR= > Hungary 0.41 0.60 0.79 0.14 Poland 1.73 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 276.9600 forints) (Reporting by Sandor Peto; editing by Emelia Sithole-Matarise)

CEE MARKETS-Leu jumps from six-week lows, bond yields rise at auctions

14 Mar 2019

* Leu gains; central bank may have intervened * Romanian government may alter new taxes * Hungary, Romania sell bonds at increased yields * Forint hits 10-month high, British Brexit vote watched (Adds government bond auctions in Bucharest and Budapest) By Sandor Peto and Luiza Ilie BUDAPEST/BUCHAREST, March 14 The leu rebounded on Thursday from the six-week low it reached late on Wednesday, after what market participants said may have been possible intervention by Romania's central bank. Romanian government bond yields rose to multi-week highs and the finance ministry sold five-year bonds at an average yield of 4.47 percent, up 18 basis points from a sale four weeks ago. Romanian asset prices have been jittery in the three months since the government announced new taxes on various businesses, including banks. The government is expected to work out changes to the levies by next week to prevent a downgrade of its credit rating outlook to negative from stable by Standard & Poor's. The leu gained 0.3 percent against the euro to trade at 4.768 at 0930 GMT, off Wednesday's six-week lows at 4.78. "The historically high turnover (on Wednesday) is supporting the idea of official offers coming in to protect the Romanian leu," Bucharest-based ING Bank analysts said in a note. Romania's overnight ROBOR interbank interest rate was bid at 1.41 percent, unchanged from Wednesday and still near three-month lows. The yield on the five-year benchmark Romanian bond was bid higher by 7 basis points in the secondary market at 4.32 percent. Government bond yields rose 1 to 2 basis points in the region's main markets, tracking Bunds. The Hungarian government sold 106 billion forints ($381.08 million) worth of bonds at its bi-weekly auction and top-up tender, boosting its original 65 billion forint offer. Yields rose from an auction held two weeks ago. But after the sale they retreated by about 1 basis point in the secondary market, indicating that demand remained strong. Regional currencies were mixed as investors waited for a third British parliamentary vote this week on its planned exit from the European Union, this time on whether to delay the March 29 deadline. The forint gained 0.2 percent against the euro to 314.32, setting a 10-month high amid expectations the Hungarian central bank will start to tighten policy at its meeting on March 26. Poland's zloty weakened, trading at 4.3045 versus the euro. In equities markets, the stocks OTP, the region's biggest independent lender which reported record earnings for 2018 two weeks ago, rose more than 1 percent to a record high. CEE SNAPSHOT AT MARKETS 1459 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6740 25.6520 -0.09% +0.13% crown > Hungary <EURHUF= 314.3200 314.8500 +0.17% +2.15% forint > Polish <EURPLN= 4.3045 4.3005 -0.09% -0.35% zloty > Romanian <EURRON= 4.7660 4.7799 +0.29% -2.35% leu > Croatian <EURHRK= 7.4230 7.4163 -0.09% -0.18% kuna > Serbian <EURRSD= 118.0200 118.1900 +0.14% +0.24% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1068.38 1061.630 +0.64% +8.29% 0 Budapest 41038.05 40887.58 +0.37% +4.85% Warsaw 2314.16 2314.79 -0.03% +1.65% Bucharest 7844.62 7857.52 -0.16% +6.24% Ljubljana <.SBITOP 869.00 874.53 -0.63% +8.05% > Zagreb 1767.37 1767.34 +0.00% +1.06% Belgrade <.BELEX1 707.10 705.47 +0.23% -7.17% 5> Sofia 576.25 578.77 -0.44% -3.06% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8210 0.0190 +236bps +1bps R> 5-year <CZ5YT=R 1.7940 0.0070 +218bps +0bps R> 10-year <CZ10YT= 1.9110 0.0170 +184bps +1bps RR> Poland 2-year <PL2YT=R 1.6310 -0.0900 +217bps -10bps R> 5-year <PL5YT=R 2.2280 0.0040 +261bps +0bps R> 10-year <PL10YT= 2.8840 0.0190 +281bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.21 2.26 2.28 2.03 <PRIBOR= > Hungary 0.41 0.60 0.80 0.14 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 278.1600 forints) (Editing by Larry King)

CEE MARKETS-Leu jumps from 6-week lows, tax debate stays in focus

14 Mar 2019

* Leu firms, central bank may have intervened -dealers * Investors watch how Romanian government will alter new taxes * Currencies mixed, British Brexit vote watched closely * Polish central bank sometimes intervenes, its chief says By Sandor Peto and Luiza Ilie BUDAPEST/BUCHAREST, March 14 The leu jumped on Thursday, rebounding from 6-week lows set late in the previous session, in what market participants said was possible intervention by Romania's central bank. Romanian asset prices has been jittery in the past three months since the government announced new taxes on various business sectors including banks. The government is expected to work out changes to the levies by next week to prevent a downgrade of its credit rating outlook to negative from stable by Standard & Poor's. The leu firmed a quarter of a percent against the euro through the 4.77 psychological line, to trade at 4.768 at 0930 GMT, off Wednesday's 6-week lows at 4.78. The Romanian central bank has a track record of managing the currency in the market sometimes. One Bucharest-based dealer said the central bank was probably behind the leu's rebound. "The historically high turnover (on Wednesday) is supporting the idea of official offers coming in to protect the Romanian leu," Bucharest-based ING Bank analysts said in a note. Romania's overnight ROBOR interbank interest rate was bid at 1.41 percent, unchanged from Wednesday and still near 3-month lows. Given the uncertainty over S&P's rating, an auction of 5-year Romanian bonds on Thursday "seems to have come at the wrong time", but the government could sell the full amount if it allows some rise in the yield, the ING note added. The yield on the 5-year benchmark Romanian bond was bid higher by 8 basis points in the secondary market to 4.33 percent. Hungarian yields rose 2-3 basis points ahead of the government's auction on Thursday as the market digests a rise in the sale at the bi-weekly auctions to above 100 billion forints ($359.69 million), one trader said. Regional currencies were mixed as investors were looking at the impact of the third British parliamentary vote this week concerning its planned exit from the European Union, this time on whether to delay the March 29 deadline. The forint firmed slightly, trading near Wednesday's 10-month highs amid expectations that the Hungarian central bank will start to tighten policy at its meeting on March 26. Poland's zloty eased a touch, but remained stuck at the 4.3 psychological line versus the euro. Polish central bank governor Adam Glapinski said the bank has sometimes intervened in the foreign exchange market but these interventions have been limited. DM TMS Brokers analyst Konrad Bialas said the stability of Poland's economy and monetary policy had kept the zloty very stable in the past months, rather than interventions. CEE SNAPSHOT AT MARKETS 1030 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6670 25.6520 -0.06% +0.16% crown > Hungary <EURHUF= 314.5000 314.8500 +0.11% +2.09% forint > Polish <EURPLN= 4.3020 4.3005 -0.03% -0.29% zloty > Romanian <EURRON= 4.7680 4.7799 +0.25% -2.39% leu > Croatian <EURHRK= 7.4195 7.4163 -0.04% -0.13% kuna > Serbian <EURRSD= 118.0500 118.1900 +0.12% +0.21% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1069.57 1061.630 +0.75% +8.41% 0 Budapest 41120.43 40887.58 +0.57% +5.06% Warsaw 2322.01 2314.79 +0.31% +1.99% Bucharest 7885.83 7857.52 +0.36% +6.80% Ljubljana <.SBITOP 872.67 874.53 -0.21% +8.51% > Zagreb 1769.51 1767.34 +0.12% +1.18% Belgrade <.BELEX1 700.17 705.47 -0.75% -8.08% 5> Sofia 578.91 578.77 +0.02% -2.62% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8740 0.0730 +241bps +6bps R> 5-year <CZ5YT=R 1.7910 0.0050 +217bps -1bps R> 10-year <CZ10YT= 1.9050 0.0120 +183bps +0bps RR> Poland 2-year <PL2YT=R 1.6360 -0.0850 +217bps -10bps R> 5-year <PL5YT=R 2.2360 0.0120 +261bps +0bps R> 10-year <PL10YT= 2.8900 0.0250 +281bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.21 2.26 2.28 2.03 <PRIBOR= > Hungary 0.41 0.61 0.81 0.14 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 278.0200 forints) (Editing by Mark Heinrich)

CORRECTED-CEE MARKETS-Forint hits 10-month high, leu rebounds despite weak output

13 Mar 2019

(Corrects headline to show forint hit 10-month high (rather than low) * Forint crosses 315 vs euro for first time since May 2018 * New central bank appointment sustains tightening forecasts * Leu rebounds from multi-week lows despite weak output data By Sandor Peto BUDAPEST, March 13 The forint hit 10-month highs on Wednesday amid expectations that Hungary's central bank will start to tighten liquidity in markets late this month to fight inflation. The currency crossed the 315 line against the euro for the first time since May last year, and traded at 314.80 at 1055 GMT. Central Europe's most liquid currency, the zloty was stuck at 4.3 versus the euro, with the euro/dollar cross little changed. Investors held their breath as Britain's parliament voted down late on Tuesday a plan for an orderly exit from the European Union on March 29. If Britain leaves without a deal this would pose risks to the region's foreign trade, but as markets are already aware of this risk the forint's strengthening was natural, market participants said. Prime Minister Viktor Orban's press chief confirmed media reports on Wednesday that local UniCredit head Mihaly Patai could become central bank deputy governor next month. That prospect does not change expectations for gradual monetary tightening as Patai is regarded as an ally of Governor Gyorgy Matolcsy, market participants said. "The forint may head towards 313.30-50 now," one Budapest-based dealer said. The dealer also said the central bank might increase its -0.15 percent overnight deposit rate at its March 26 meeting, but it was more likely to only cut market liquidity via its fx swap facility. Monetary tightening is likely to advance in "baby steps" as the European Central Bank delays its own rate hikes, ING analyst Peter Virovacz said. Romania's leu also firmed, by 0.2 percent to 4.763 versus the euro, rebounding from multi-week lows against the euro and the zloty. Investors await government decisions by the end of this week to amend new taxes imposed on sectors including banks, which knocked Romanian assets down in the past few months. The leu rebounded from levels beyond 4.77 against the euro despite fresh data showing a fall in Romania's industrial output in January, even though net wages surged by over 18 percent in annual terms. A surge in the trade deficit was already highlighted by figures released on Tuesday. ING analysts said in a morning note that even though the Romanian central bank, which often intervened in the market in the past to manage the leu, did not mop up increasing surplus liquidity in markets this month, "a line in the sand will be reinforced". In a separate note, ING said the fall in industrial output was driven by a government cap on gas prices, while a slowdown in euro zone export markets pointed to stagnation in Romanian industrial output this year. CEE SNAPSHOT AT MARKETS 1155 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6700 25.6600 -0.04% +0.14% crown > Hungary <EURHUF= 314.8000 315.0500 +0.08% +2.00% forint > Polish <EURPLN= 4.2988 4.2970 -0.04% -0.21% zloty > Romanian <EURRON= 4.7630 4.7735 +0.22% -2.29% leu > Croatian <EURHRK= 7.4180 7.4165 -0.02% -0.11% kuna > Serbian <EURRSD= 118.0900 118.1000 +0.01% +0.18% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1056.56 1060.360 -0.36% +7.10% 0 Budapest 40690.84 40612.50 +0.19% +3.97% Warsaw 2306.25 2310.10 -0.17% +1.30% Bucharest 7859.48 7905.62 -0.58% +6.44% Ljubljana <.SBITOP 870.27 870.21 +0.01% +8.21% > Zagreb 1769.52 1766.20 +0.19% +1.18% Belgrade <.BELEX1 698.52 698.28 +0.03% -8.29% 5> Sofia 578.22 578.46 -0.04% -2.73% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8240 0.0190 +237bps +2bps R> 5-year <CZ5YT=R 1.7890 0.0130 +217bps +1bps R> 10-year <CZ10YT= 1.8930 0.0050 +182bps -1bps RR> Poland 2-year <PL2YT=R 1.6090 -0.1050 +215bps -10bps R> 5-year <PL5YT=R 2.2250 0.0030 +261bps +0bps R> 10-year <PL10YT= 2.8750 -0.0050 +280bps -2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.19 2.23 2.24 2.03 <PRIBOR= > Hungary 0.38 0.59 0.78 0.14 Poland 1.75 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto. Editing by Jane Merriman)

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