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Sandor Peto

CEE MARKETS-Forint leads easing with central bank seen holding fire

21 May 2019

By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, May 21 Central European currencies eased on Tuesday on global dollar buying, with the forint leading the way on growing expectations that rising inflation will not prompt a tightening of monetary policy in Hungary. The greenback attracted safe-haven buying due to a rise in Treasury yields and amid signs that Asian economies are feeling the pinch from the U.S.-China trade war. Expectations that eurosceptic parties may fare well in this week's elections for the European Parliament added to pressure on the euro, which in turn weighed on the most liquid currencies in the European Union's eastern wing - the Polish zloty and the Hungarian forint. They had shed 0.2% against the euro by 0911 GMT, trading at 4.3056 and 327.1, respectively. The forint touched a new 9-month low of 327.5 and edged closer to record lows set almost a year ago beyond 330. The fundamental cause of the currency's recent weakness has been doubts the dovish central bank (NBH) would fight a rise in inflation with tightening measures. A surge in wages and a rise in oil prices have accelerated inflation across Central Europe this year, prompting the NBH to raise one of its benchmark rates in March and the Czech central bank to raise its main rate early this month. However, both measures were regarded as a "dovish hike", which may not be followed up by any further tightening this year. The Hungarian central bank is not expected to tighten policy at its May 28 meeting, with many market participants also seeing no changes at the June meeting where it will discuss its fresh inflation report. Inflation in Poland is still within the central bank's (NBP) 1.5-3.5% target range, despite a rise to 2.2% in April. Polish corporate sector wages rose by an above-forecast annual 7.1% in April, according to data released on Tuesday. "We expect the upward trend to continue in the coming months," said Jakub Rybacki, economist at ING, citing an NBP survey of companies on their wage plans. Although the European Parliament elections are unlikely to affect markets in Hungary, one Budapest-based dealer said they may cause some political uncertainty in Poland. A possible opposition victory could galvanise supporters ahead of a general election later this year, while a likely low turnout may limit any impact, analysts have said. The region's stock markets and government bonds were mostly rangebound. Prague's main index shed 0.4 percent, driven by Vienna-listed bank Erste CEE SNAPSHOT AT MARKETS 1111 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7920 25.7930 +0.00% -0.33% crown > Hungary <EURHUF= 327.1000 326.4000 -0.21% -1.84% forint > Polish <EURPLN= 4.3056 4.2975 -0.19% -0.37% zloty > Romanian <EURRON= 4.7630 4.7610 -0.04% -2.29% leu > Croatian <EURHRK= 7.4270 7.4265 -0.01% -0.23% kuna > Serbian <EURRSD= 117.8700 117.9300 +0.05% +0.36% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1044.85 1049.340 -0.43% +5.91% 0 Budapest 39523.88 39630.71 -0.27% +0.98% Warsaw 2178.32 2175.51 +0.13% -4.32% Bucharest 8204.26 8205.08 -0.01% +11.11% Ljubljana <.SBITOP 862.46 866.03 -0.41% +7.24% > Zagreb 1857.57 1853.43 +0.22% +6.22% Belgrade <.BELEX1 732.87 733.41 -0.07% -3.78% 5> Sofia 568.05 569.37 -0.23% -4.44% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6110 0.0050 +225bps +0bps R> 5-year <CZ5YT=R 1.6770 0.0130 +219bps +2bps R> 10-year <CZ10YT= 1.8130 -0.0350 +190bps -3bps RR> Poland 2-year <PL2YT=R 1.6820 -0.0030 +232bps -1bps R> 5-year <PL5YT=R 2.2730 0.0040 +278bps +1bps R> 10-year <PL10YT= 2.9060 0.0060 +300bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.42 0.60 0.79 0.21 Poland 1.75 1.76 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Kirsten Donovan)

CEE MARKETS-Stocks join wider European fall, forint remains fragile

20 May 2019

* Stocks track German fall * Budapest, Prague set multi-month lows * Forint near 9-month low before May 28 c.bank meeting (Recasts with losses in stocks) By Sandor Peto BUDAPEST, May 20 Central European stocks fell on Monday amid souring market sentiment after German chipmaker Infineon halted shipments to Huawei Technologies in the face of a U.S. crackdown on the Chinese firm, and Ryanair issued a profit warning. While Frankfurt's main stock index fell 1.8%, Prague shed 0.6%, Budapest 0.7% and Prague shed 0.6% and Warsaw 0.9% by 1300 GMT. Budapest's index hit its lowest level since early January after slipping last week below the 40,000-point psychological level. "The index looks quite oversold," Erste analysts said in a note, adding that a turnaround may be close. As the European mood deteriorated on Monday, the index was knocked further by the shares of OTP Bank. OTP fell 1.7 percent to below the psychologically sensitive level of 12,000 forints, and the next support level is at 11,600 forints, Equilor analyst Zoltan Varga said. Prague's main index touched a 3-and-1/2-month low, driven by a 4.3 percent decline in the stocks of Vienna-based Erste group after the bank paid out a dividend. Vienna stocks fell overall following the collapse of the Austrian coalition government. Regional currencies firmed mildly as the euro also regained some ground. The forint underperformed the zloty which gained 0.2 percent to 4.2966, piercing the 4.3 level and its 200-day moving average. The forint firmed a shade to 326.1 versus the euro, but stayed near Friday's nine-month lows. It remains fragile as the Hungarian central bank is expected not to tighten policy at its May 28 meeting despite a rise in inflation across the region this year, market participants said. Some investors sell the currency to test if the NBH will change its rhetoric if the forint approaches its record lows near 330, Budapest-based dealers said. "The question is if they have a pain threshold in terms of a weaker forint," one dealer said. The NBH has said that it would make policy changes only at its meetings where it discusses its quarterly inflation report. The next report is due in June. It has also said that it expects inflation, which came in at 3.9% in April, to retreat late this year. Poland's inflation has also increased, but at 2.2% it remains well within the central bank's (NBP) 1.5-3.5% target range. Strong first-quarter economic growth figures released across the region last week did not prompt NBP Governor Adam Glapinski, who spoke after the bank's meeting on Wednesday, to change his prediction that rates could stay unchanged for years. CEE SNAPSHOT AT MARKETS 1500 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7630 25.7650 +0.01% -0.22% crown > Hungary <EURHUF= 326.1000 326.3000 +0.06% -1.54% forint > Polish <EURPLN= 4.2966 4.3039 +0.17% -0.16% zloty > Romanian <EURRON= 4.7590 4.7625 +0.07% -2.21% leu > Croatian <EURHRK= 7.4260 7.4260 +0.00% -0.22% kuna > Serbian <EURRSD= 117.8500 117.9500 +0.08% +0.38% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1044.86 1050.750 -0.56% +5.91% 0 Budapest 39586.19 39877.82 -0.73% +1.14% Warsaw 2165.09 2184.35 -0.88% -4.90% Bucharest 8225.81 8223.72 +0.03% +11.41% Ljubljana <.SBITOP 866.03 869.50 -0.40% +7.68% > Zagreb 1857.32 1864.51 -0.39% +6.20% Belgrade <.BELEX1 733.41 732.14 +0.17% -3.71% 5> Sofia 570.14 568.87 +0.22% -4.09% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5920 -0.1790 +224bps -18bps R> 5-year <CZ5YT=R 1.6780 0.0130 +219bps +1bps R> 10-year <CZ10YT= 1.8320 -0.0050 +192bps -2bps RR> Poland 2-year <PL2YT=R 1.6800 -0.0340 +233bps -3bps R> 5-year <PL5YT=R 2.2630 -0.0060 +277bps -1bps R> 10-year <PL10YT= 2.8960 0.0030 +299bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.35 0.52 0.69 0.19 Poland 1.74 1.75 1.76 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Susan Fenton and Gareth Jones)

CORRECTED-CEE MARKETS-Forint bucks rebound, central bank not seen tightening policy

20 May 2019

(Corrects para 3 to say the zloty pierced the 4.3 (not the 3.1) line) * Increased global risk appetite helps CEE currencies * Forint stays near 9-month low ahead of May 28 cbank meeting * Stocks mixed, Erste fall drags down Prague's index By Sandor Peto BUDAPEST, May 20 The forint was weak on Monday, bucking a rebound in other Central European currencies, on expectations the Hungarian central bank (NBH) will keep its benchmark interest rate at record lows next week. It traded near Friday's nine-month lows versus the euro, at 326.35 at 0848 GMT, even though easing global trade worries and election wins by incumbents in Australia and India helped stocks and currencies firm in emerging markets. The Polish zloty gained 0.1% against the euro, piercing the 4.3 line to trade at its 200-day moving average. The forint, however, quickly reversed an initial rebound. It hit its weakest level since early September on Friday amid growing expectations that the NBH would not tighten its policy at its May 28 meeting despite a rise in inflation across the region this year. Dealers said the currency was likely to weaken further in the next days as some investors test if the NBH will change its rhetoric if the forint approaches its record lows near 330. "Their latest comments did not show much worry... The question is if they have a pain threshold in terms of a weaker forint," one Budapest-based dealer said. The NBH has said that it would make policy changes only at its meetings where it discusses its quarterly inflation report. The next report is due in June. It has also said that it expected inflation, which ran at 3.9% in April, to retreat late this year. Poland's inflation has also increased, but at 2.2% it was well within the central bank's (NBP) 1.5-3.5% target range. Strong first-quarter economic growth figures released across the region last week did not prompt NBP Governor Adam Glapinski, who spoke after the bank's meeting on Wednesday, to change his prediction that rates could stay unchanged for years. The May 26 European Parliament election is a political risk in Poland as a possible opposition victory could galvanize its supporters ahead of a general election late this year. "However, due to low turnouts, these preferences (at the vote)... should not be taken as fully representative," Erste analysts said in a note. While Central European government bonds tracked a rise in Bund yields, stocks were mixed. Prague's main index shed 0.4%, driven lower by a 3.5% decline in the shares of Austria-based lender Erste. Vienna stocks fell after the collapse of the Austrian government. CEE SNAPSHOT AT MARKETS 1048 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7710 25.7650 -0.02% -0.25% crown > Hungary <EURHUF= 326.3500 326.3000 -0.02% -1.61% forint > Polish <EURPLN= 4.2981 4.3039 +0.13% -0.20% zloty > Romanian <EURRON= 4.7610 4.7625 +0.03% -2.25% leu > Croatian <EURHRK= 7.4250 7.4260 +0.01% -0.20% kuna > Serbian <EURRSD= 117.7900 117.9500 +0.14% +0.43% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1046.81 1050.750 -0.37% +6.11% 0 Budapest 40105.49 39877.82 +0.57% +2.47% Warsaw 2177.35 2184.35 -0.32% -4.36% Bucharest 8244.34 8223.72 +0.25% +11.66% Ljubljana <.SBITOP 867.52 869.50 -0.23% +7.87% > Zagreb 1857.18 1864.51 -0.39% +6.20% Belgrade <.BELEX1 730.70 732.14 -0.20% -4.07% 5> Sofia 566.67 568.87 -0.39% -4.67% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5920 -0.1790 +224bps -18bps R> 5-year <CZ5YT=R 1.6780 0.0130 +218bps +0bps R> 10-year <CZ10YT= 1.8240 -0.0120 +191bps -3bps RR> Poland 2-year <PL2YT=R 1.7210 0.0070 +237bps +1bps R> 5-year <PL5YT=R 2.2910 0.0220 +279bps +1bps R> 10-year <PL10YT= 2.9060 0.0130 +299bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interbank Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.35 0.52 0.69 0.16 Poland 1.75 1.76 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Susan Fenton)

CEE MARKETS-Forint leads currency easing on overheating worry

17 May 2019

* Toughness from China helps weaken currencies, stocks * Romania raises inflation forecasts, CPI picked up in region * Hungarian c.bank seen not reacting, forint sets 9-mth low (Recasts with forint underperformance) By Sandor Peto BUDAPEST, May 17 The Hungarian forint hit a 9-month-low against the euro on Friday due to concerns of a potential further rise in inflation if the central bank maintains its record-low base rate. The forint led other Central European currencies lower as tough comments from China in its trade war with the United States fuelled risk aversion in global markets. Budapest and Warsaw topped losses in regional stock indexes, shedding 0.8%. There were also fears that the region's economies could become overheated. The main economies released robust first-quarter economic growth figures this week, led by a 5.3% annual rise in Hungary, while inflation has been rising across the region this year, fuelled by surging wages and an increase in crude prices. Hungary's central bank is due to meet on May 28 but it is not expected to tighten policy, and may keep rates on hold later as it expects inflation to retreat late this year, market participants said. "This (expectation) causes the forint fall," said Peter Virovacz, analyst at ING in Budapest. "You can see that it is forint-specific as the crown and the zloty have weakened much less." The forint shed as much as 0.7%, trading at 326.38 against the euro, after touching a 9-month low at 326.47. Bid at 75.8487, the forint set a 7-1/2-month low against the zloty. The leu, the zloty and the Czech crown eased 0.1% against the euro by 1222 GMT. Romania's central bank sharply increased its inflation forecasts and its Governor Mugur Isarescu said there was no guarantee that raising the benchmark rate would curb price pressures. The Czech central bank hiked interest rates early this month to fight inflation, but is not expected to tighten them further this year. The Polish and Romanian banks kept rates on hold on Wednesday. Polish data released on Thursday showed a jump in annual net inflation to 1.7%, its highest level since late 2012. But the central bank is not worried, as based on its comments after its meeting on Wednesday, core inflation is only returning to normal levels, Raiffeisen analyst Dorotha Strauch said. "Thus it seems the indicator would have to continue to rise significantly to trigger a rate hike," she said in a note. The region's central banks expect sluggish euro zone economic growth to help keep a lid on inflation through low import prices. The forint' s fall accelerated on Friday after euro zone figures showed a tad higher annual inflation than expected. "Those figures, however, do not change the picture significantly... the forint had its own causes to fall," Virovacz said. CEE SNAPSHOT AT MARKETS 1422 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7420 25.7260 -0.06% -0.14% crown > Hungary <EURHUF= 326.3800 324.1900 -0.67% -1.62% forint > Polish <EURPLN= 4.3015 4.2988 -0.06% -0.28% zloty > Romanian <EURRON= 4.7625 4.7600 -0.05% -2.28% leu > Croatian <EURHRK= 7.4305 7.4245 -0.08% -0.28% kuna > Serbian <EURRSD= 117.9900 117.9300 -0.05% +0.26% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1048.65 1051.570 -0.28% +6.29% 0 Budapest 39960.13 40288.28 -0.81% +2.10% Warsaw 2171.68 2188.43 -0.77% -4.61% Bucharest 8249.14 8212.27 +0.45% +11.72% Ljubljana <.SBITOP 868.60 864.65 +0.46% +8.00% > Zagreb 1859.59 1850.45 +0.49% +6.33% Belgrade <.BELEX1 732.14 732.00 +0.02% -3.88% 5> Sofia 565.48 569.12 -0.64% -4.88% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5890 -0.1860 +224bps -18bps R> 5-year <CZ5YT=R 1.6780 0.0130 +220bps +3bps R> 10-year <CZ10YT= 1.8120 -0.0070 +193bps +2bps RR> Poland 2-year <PL2YT=R 1.6750 -0.0090 +233bps +0bps R> 5-year <PL5YT=R 2.2360 -0.0080 +276bps +1bps R> 10-year <PL10YT= 2.8750 -0.0070 +299bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.35 0.52 0.70 0.16 Poland 1.75 1.75 1.76 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Alan Charlish in Warsaw; Editing by Andrew Cawthorne)

CEE MARKETS-Assets fall on global risk aversion, overheating fears

17 May 2019

* Toughness from China helps weaken currencies, stocks * Forint weakens through 325, zloty through 4.3 vs euro * Strong GDP and rising CPI fuel some overheating fear in CEE * Possible Polish opposition win in EU vote seen as political risk By Sandor Peto BUDAPEST, May 17 Central European currencies and stocks fell on Friday as tough comments from China in its trade war with the United States fuelled risk aversion in global markets. There were also fears that the region's economies could become overheated and next week's European Parliament elections could cause political tremors in Poland if the united opposition beats the government. The forint and the zloty eased 0.2% against the euro by 0840 GMT. The Hungarian unit crossed the 325 level, approaching 7-month lows reached on Wednesday, and the zloty returned to the weak side of the 4.3 line, to trade at 4.3075. The Czech crown and the leu also eased. Budapest led a decline in most of the region's main equity indexes, shedding 1%, while regional government bond yields tracked the zigzags of Bunds. "The euro has also eased," one Budapest-based dealer said. "But I would rather attribute the weakening (of CEE currencies) to the global risk aversion, reflected in the rebound of the (safe-haven) yen." The yen rose and stocks fell in global markets as the Communist Party's People's Daily in China evoked the patriotic spirit of past wars in a front page commentary, saying the trade dispute with Washington will only make China stronger. The trade war, which has been the key driver of market movements in the region in the past weeks, fuels worries about global economic growth. The main Central European economies released robust first-quarter growth figures this week. But a rebound in inflation across the region this year, driven by surging wages and a rise in global crude prices, leads to fears of overheating. After a central bank rate hike in Prague and some tightening in local currency liquidity in Budapest and Bucharest, no rate tightening is on the horizon in the region as the European Central bank is also seen retaining its loose policy. Polish data released on Thursday showed a jump in annual net inflation to 1.7%, its highest level since late 2012. The central bank is not worried, as based on its comments after its meeting on Wednesday, core inflation is only returning to normal levels, Raiffeisen analyst Dorotha Strauch said. "Thus it seems the indicator would have to continue to rise significantly to trigger a rate hike," she said in a note. The May 26 European Parliament election is a political risk in Poland as a possible opposition victory could galvanize its supporters ahead of general elections late this year and next year's presidential elections, analysts have said. CEE SNAPSHOT AT MARKETS 1040 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7500 25.7260 -0.09% -0.17% crown > Hungary <EURHUF= 324.7000 324.1900 -0.16% -1.11% forint > Polish <EURPLN= 4.3075 4.2988 -0.20% -0.42% zloty > Romanian <EURRON= 4.7630 4.7600 -0.06% -2.29% leu > Croatian <EURHRK= 7.4255 7.4245 -0.01% -0.21% kuna > Serbian <EURRSD= 117.9900 117.9300 -0.05% +0.26% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1050.82 1051.570 -0.07% +6.51% 0 Budapest 39895.98 40288.28 -0.97% +1.93% Warsaw 2169.80 2188.43 -0.85% -4.69% Bucharest 8216.69 8212.27 +0.05% +11.28% Ljubljana <.SBITOP 868.78 864.65 +0.48% +8.02% > Zagreb 1859.14 1850.45 +0.47% +6.31% Belgrade <.BELEX1 731.32 732.00 -0.09% -3.99% 5> Sofia 564.13 569.12 -0.88% -5.10% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5890 -0.1860 +224bps -18bps R> 5-year <CZ5YT=R 1.7140 0.0500 +223bps +6bps R> 10-year <CZ10YT= 1.8480 0.0290 +195bps +4bps RR> Poland 2-year <PL2YT=R 1.6910 0.0070 +235bps +2bps R> 5-year <PL5YT=R 2.2430 -0.0010 +276bps +1bps R> 10-year <PL10YT= 2.8910 0.0090 +299bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.35 0.52 0.69 0.16 Poland 1.74 1.76 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Alan Charlish in Warsaw; Editing by Andrew Cawthorne)

CEE MARKETS-Currencies firm up on possible delay in U.S. car tariffs

16 May 2019

* Possible delay in U.S. tariffs on auto imports helps currencies * Forint lags zloty, crude price rise highlights CPI concern * Equities are mixed, oil stocks rise in Budapest and Warsaw By Sandor Peto BUDAPEST, May 16 Central European currencies firmed up on Thursday on a report that U.S. President Donald Trump planned to delay a decision that would have imposed tariffs on auto imports from Europe. The region's currencies and the euro had jumped late on Wednesday after a Bloomberg report on a possible six-month postponement by Trump from a May 18 deadline. The auto industry and its exports are a key driver of economic growth in Central Europe, as well as surging wages which boost domestic demand. The zloty rebounded from two-month lows against the euro, and by Thursday it returned to the firm side of the 4.3 line, testing its 200-day moving average. Trading at 4.2935 at 0923 GMT, it was firmer by 0.2%, even though the Polish central bank played down the rise in inflation in recent months at its meeting on Wednesday. Its Governor Adam Glapinski said there was no need to change interest rates until the end of the Monetary Policy Council's term in 2022. Running at 2.2% in April, Polish annual inflation is still well within the central bank's 1.5-3.5% target range. In Romania, however, inflation has exceeded a similar target, and Hungary's 3.9% rate has approached the top of the 2%-4% target range. The forint also tracked the regional firming, rebounding from a seven-month low of 325.8 versus the euro on Wednesday, but it lost steam on Thursday, trading at 324.25. It eased against the zloty, and bid around 75.5 it approached 7-1/2-month lows. "The Romanian central bank hinted at some tightening (through managing market liquidity) at its meeting yesterday... but there is no sign that the Hungarian central bank would change policy," said Peter Virovacz, analyst of ING in Budapest. A rise in crude prices can push inflation further up. The forint is also vulnerable as Hungary's real interest rates are the lowest in the region while its economic growth is the fastest based on first-quarter data released on Wednesday, he said. "There is no risk in shorting the forint," he added. Central European stocks were mixed. Only the Prague bourse tracked a fall in European shares after the U.S. government imposed sanctions on Chinese telecoms giant Huawei. A rebound in OTP Bank shares, driven by technical factors, and in oil group MOL helped Budapest's blue-chip index rise 0.6%. Warsaw's index was kept in the positive by a rise in oil group PKN Orlen and copper producer KGHM . The latter said that it may pay a dividend on its 2019 earnings. CEE SNAPSHOT AT MARKETS 1123 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6950 25.7200 +0.10% +0.05% crown > Hungary <EURHUF= 324.2500 324.5500 +0.09% -0.98% forint > Polish <EURPLN= 4.2935 4.3032 +0.23% -0.09% zloty > Romanian <EURRON= 4.7620 4.7620 +0.00% -2.27% leu > Croatian <EURHRK= 7.4210 7.4205 -0.01% -0.15% kuna > Serbian <EURRSD= 117.8500 117.9600 +0.09% +0.38% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1049.04 1052.070 -0.29% +6.33% 0 Budapest 40522.79 40291.35 +0.57% +3.54% Warsaw 2172.82 2169.18 +0.17% -4.56% Bucharest 8178.13 8174.16 +0.05% +10.76% Ljubljana <.SBITOP 864.62 863.47 +0.13% +7.51% > Zagreb 1841.68 1837.12 +0.25% +5.31% Belgrade <.BELEX1 731.86 733.01 -0.16% -3.92% 5> Sofia 566.91 566.36 +0.10% -4.63% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5930 -0.1900 +225bps -19bps R> 5-year <CZ5YT=R 1.6990 0.0120 +222bps +2bps R> 10-year <CZ10YT= 1.8000 -0.0430 +191bps -3bps RR> Poland 2-year <PL2YT=R 1.6520 -0.0040 +231bps +0bps R> 5-year <PL5YT=R 2.2280 0.0050 +275bps +1bps R> 10-year <PL10YT= 2.8540 0.0070 +297bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.35 0.52 0.69 0.16 Poland 1.75 1.74 1.76 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Hugh Lawson)

CEE MARKETS-Forint falls despite robust CEE growth, central banks hold fire

15 May 2019

* GDP growth in CEE is higher than forecast * Wage surge fuels inflation, export outlook uncertain * Forint at lowest in seven months, bond yields fall * Polish, Romanian central banks keep rates on hold * Budapest stocks rebound (Adds Polish and Romanian central bank decisions and comments) By Sandor Peto and Luiza Ilie BUDAPEST, May 15 The forint fell on Wednesday to its weakest level against the euro since October after robust first-quarter economic data from Central Europe failed to ease concerns over inflation in the region and growth in Europe. The Romanian and the Polish central banks kept their interest rates on hold at their respective policy meetings on Wednesday. Meanwhile, figures out on Wednesday from the Czech Republic, Hungary, Poland, Romania and Slovakia showed gross domestic product (GDP) growing faster than expected on an annual basis. However the forint touched a seven-month low of 325.8 against the euro before recovering to 324.87 by late trade, still weaker by 0.1%. Hungary's growth picked up to 5.3%, its fastest rate in 15 years. But the news coincided with a confirmation from German car maker Daimler that it had postponed further expansion of a Hungarian plant. "While these (GDP data) releases (in Central Europe) were bullish, trade tensions loom large as a near-term risk," Morgan Stanley analyst Pasquale Diana said in a note. "Also, recent announcements on auto FDI (Hungary) highlight more structural challenges for the region," Diana added. Domestic demand remains the key to economic growth in Central Europe, while a slowdown in the euro zone, the region's key export market, is causing concern, as does the threat of U.S. tariffs on European car imports. The Hungarian central bank (NBH) is unlikely to tighten policy at its meeting later this month since GDP growth may slow and the bank expects a retreat in inflation late this year, market participants said. INFLATION While Hungary's inflation is near the NBH's 2-4% target range, Poland's inflation is well within the 1.5-3.5% goal. There is no need to change Polish interest rates until the end of the Monetary Policy Council's term in 2022, governor Adam Glapinski said after an MPC meeting on Wednesday. The zloty, which touched a 10-week low against the euro in early trade, rebounded later, to trade at 4.3025, firmer by 0.1% from Tuesday, as the central bank's comments caused no surprise. Polish government bond yields fell in tandem with their Hungarian peers, tracking Bunds. Hungary's 10-year yield was fixed at 3.13%, dropping 4 basis points to its lowest level in 5 weeks. The leu eased slightly to 4.7615 versus the euro, even though Romanian central bank Governor Mugur Isarescu said policymakers would continue to use market liquidity operations to tighten monetary policy. Regional equities gained, tracking a rebound in Asia caused by hopes that the United States and China will resolve their trade dispute. Leading the way was a 0.9% rise for Budapest's bluechip index, which had hit a three-month low in Tuesday's session. CEE SNAPSHOT AT MARKETS 1651 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7350 25.7460 +0.04% -0.11% crown > Hungary <EURHUF= 324.8700 324.4500 -0.13% -1.17% forint > Polish <EURPLN= 4.3035 4.3086 +0.12% -0.32% zloty > Romanian <EURRON= 4.7615 4.7600 -0.03% -2.26% leu > Croatian <EURHRK= 7.4230 7.4125 -0.14% -0.18% kuna > Serbian <EURRSD= 117.9800 117.9000 -0.07% +0.27% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1052.07 1050.310 +0.17% +6.64% 0 Budapest 40428.29 40084.64 +0.86% +3.29% Warsaw 2174.26 2163.94 +0.48% -4.50% Bucharest 8174.16 8135.82 +0.47% +10.71% Ljubljana <.SBITOP 863.47 863.12 +0.04% +7.36% > Zagreb 1837.12 1840.89 -0.20% +5.05% Belgrade <.BELEX1 733.01 735.08 -0.28% -3.77% 5> Sofia 566.36 563.42 +0.52% -4.73% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6140 -0.1470 +228bps -12bps R> 5-year <CZ5YT=R 1.6870 -0.0210 +220bps +1bps R> 10-year <CZ10YT= 1.8610 0.0020 +196bps +3bps RR> Poland 2-year <PL2YT=R 1.6560 -0.0410 +232bps -2bps R> 5-year <PL5YT=R 2.2220 -0.0040 +274bps +2bps R> 10-year <PL10YT= 2.8500 -0.0160 +295bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.19 2.20 <PRIBOR= > Hungary 0.34 0.50 0.68 0.16 Poland 1.74 1.75 1.76 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, editing by Larry King)

CEE MARKETS-Robust GDP data fail to boost currencies amid uncertain outlook

15 May 2019

* GDP growth in CEE is higher than forecast * Wage surge fuels inflation, export outlook uncertain * Daimler confirms postponing plant expansion in Hungary * Forint at lowest in more than five months * Budapest stocks rebound By Sandor Peto and Luiza Ilie BUDAPEST, May 15 The forint fell to its weakest since November on Wednesday after robust first-quarter economic data from Central Europe failed to ease concern over inflation in the region and growth in Europe. Output figures from the Czech Republic, Hungary, Poland, Romania and Slovakia showed faster-than-expected annual growth. But the forint touched a five-and-a-half month low of 325 to the euro. The Polish zloty and Romanian leu also weakened. Hungary's growth picked up to 5.3%, its fastest rate in 15 years. But the news coincided with a confirmation from German car maker Daimler that it had postponed further expansion of a Hungarian plant. Domestic economies remain the key to growth in Central Europe. A slowdown in the euro zone, the region's key export market, raises worries. So does the threat of U.S. tariffs on European car imports. Germany's economy returned to quarterly growth in the first quarter, but annual growth at 0.7% was well below the 2.5% and 5.3% growth rates reported in Central Europe on Wednesday. Investors are expected to watch the comments of the Polish and Romanian central banks closely after their meetings on Wednesday. They are expected to keep interest rates on hold, but may comment on a rise in inflation in April. "We expect hawkish rhetoric at today's press briefing (in Bucharest) and the strict liquidity control pledge to be reiterated," ING analysts said in a note. "Without some augmentation of the policy toolkit, however, the pledge is likely to lose credibility." The Hungarian central bank is unlikely to tighten policy at its meeting late this month, since GDP growth may slow and the bank expects a retreat in inflation late this year, market participants said. Regional equities gained, tracking a rebound in Asia caused by hopes the United States and China will resolve their trade disputes, averting a protracted trade war. Budapest's blue-chip stock index rose 0.6%, regaining some ground from its three-month low on Tuesday, as shares of OTP Bank rebounded. Regional government bond yields tracked a drop in Bunds. Ten-year Polish bonds traded at 2.83%. CEE SNAPSHOT AT MARKETS 1026 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7460 25.7460 +0.00% -0.15% crown > Hungary <EURHUF= 324.8000 324.4500 -0.11% -1.14% forint > Polish <EURPLN= 4.3100 4.3086 -0.03% -0.47% zloty > Romanian <EURRON= 4.7610 4.7600 -0.02% -2.25% leu > Croatian <EURHRK= 7.4150 7.4125 -0.03% -0.07% kuna > Serbian <EURRSD= 117.7900 117.9000 +0.09% +0.43% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1053.23 1050.310 +0.28% +6.76% 0 Budapest 40330.57 40084.64 +0.61% +3.04% Warsaw 2176.34 2163.94 +0.57% -4.41% Bucharest 8167.87 8135.82 +0.39% +10.62% Ljubljana <.SBITOP 864.14 863.12 +0.12% +7.45% > Zagreb 1838.09 1840.89 -0.15% +5.11% Belgrade <.BELEX1 733.01 735.08 -0.28% -3.77% 5> Sofia 562.18 563.42 -0.22% -5.43% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6070 -0.1550 +226bps -14bps R> 5-year <CZ5YT=R 1.7160 0.0080 +222bps +3bps R> 10-year <CZ10YT= 1.8320 -0.0260 +193bps +0bps RR> Poland 2-year <PL2YT=R 1.6990 0.0020 +236bps +2bps R> 5-year <PL5YT=R 2.2070 -0.0190 +272bps +0bps R> 10-year <PL10YT= 2.8410 -0.0250 +293bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.19 2.20 <PRIBOR= > Hungary 0.35 0.52 0.69 0.16 Poland 1.75 1.75 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, editing by Larry King)

CEE MARKETS-Stocks lag global rebound, hurt by U.S. tariff risk

14 May 2019

* Stocks mostly lag rebound in Asia, Western Europe * Fear of trade war, economic slowdown still hurts * OTP leads fall, fails to stay above 200-day average By Sandor Peto BUDAPEST, May 14 Budapest stocks fell on Tuesday as fears of a global trade war persisted even though Asian and Western European equities regained some ground after a sell-off. Slightly more optimistic comments from U.S. and Chinese officials on trade talks reduced the tension, but new U.S. tariffs on car imports from Europe remained a risk. Vehicle production has been a key component of economic growth in Central Europe, along with a rise in domestic consumption as wages surge in the region. The region's stock indexes underperformed London and Frankfurt. Worst was Budapest, where the main index was down 1.3% by 1330 GMT. It dropped through the 40,000-point level, setting a 3-month low and approaching its 200-day moving average of 39,180 points. It has been retreating from record highs in the past three weeks as the U.S.-China trade war and worries over economic growth in Europe and elsewhere have weighed on equities. OTP, the region's biggest independent lender, fell more than 3% on Tuesday. Worries over the trade talks brought the share down below its 200-day moving average, which it exceeded on Friday after the bank reported a strong rise in first-quarter earnings. Hungarian first-quarter economic output figures due on Wednesday are expected to show steady annual growth at a robust 5.1%. But Monday's media reports that German luxury car makers Daimler AG and BMW might be putting their investments in Hungary on hold have fuelled concerns over the region's auto industry. The companies are struggling to deal with lower demand and the threat of higher auto tariffs from the United States, the daily Handelsblatt reported. "Auto industry has a big part in the GDP ... worries over it definitely play a role in the fall of stocks," one Budapest-based trader said. Warsaw's and Bucharest's stock indexes were almost flat, while Prague rose 0.5%, rebounding from a 3-and-1/2-month low. Regional currencies were mostly slightly in the red against the euro, except for the crown which drifted off Monday's 6-week lows. Czech, Polish and Romanian first-quarter economic output data due on Wednesday are expected to show some slowdown in growth to rates which are still stronger than in euro zone economies. The Polish and the Romanian central banks are expected to keep interest rates on hold at their meetings on Wednesday, even though they may comment on April's inflation rise. "The probability that (Polish) inflation may touch 3% (vs the bank's 1.5-3.5 percent target) at the end of the year has visibly increased," Erste analysts said in a note. CEE SNAPSHOT AT MARKETS 1530 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7530 25.7730 +0.08% -0.18% crown > Hungary <EURHUF= 324.3700 324.1500 -0.07% -1.01% forint > Polish <EURPLN= 4.3065 4.3062 -0.01% -0.39% zloty > Romanian <EURRON= 4.7615 4.7620 +0.01% -2.26% leu > Croatian <EURHRK= 7.4100 7.4063 -0.05% +0.00% kuna > Serbian <EURRSD= 117.8500 117.8700 +0.02% +0.38% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1049.44 1043.870 +0.53% +6.37% 0 Budapest 39995.21 40537.85 -1.34% +2.19% Warsaw 2174.32 2172.97 +0.06% -4.49% Bucharest 8150.55 8164.57 -0.17% +10.39% Ljubljana <.SBITOP 862.94 865.06 -0.25% +7.30% > Zagreb 1838.11 1840.47 -0.13% +5.11% Belgrade <.BELEX1 735.08 732.55 +0.35% -3.49% 5> Sofia 564.66 567.25 -0.46% -5.01% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6180 -0.1580 +226bps -16bps R> 5-year <CZ5YT=R 1.7180 -0.0460 +221bps -4bps R> 10-year <CZ10YT= 1.8490 -0.0010 +192bps +0bps RR> Poland 2-year <PL2YT=R 1.6500 0.0120 +229bps +2bps R> 5-year <PL5YT=R 2.2190 -0.0080 +271bps +0bps R> 10-year <PL10YT= 2.8560 0.0100 +293bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.23 2.23 2.22 2.20 <PRIBOR= > Hungary 0.37 0.54 0.70 0.16 Poland 1.74 1.74 1.75 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Andrew Cawthorne)

CEE MARKETS-Crown falls as Czech inflation slows, KGHM leads stocks decline

13 May 2019

* Trade war fears, Czech CPI drop weigh on currencies * Copper producer KGHM leads Warsaw stocks fall on trade war * Polish, Romanian central banks seen holding fire * Q1 GDP growth data seen showing slowdown except for Hungary (Adds price changes, new analyst comments, copper producer KGHM stocks fall) By Sandor Peto BUDAPEST, May 13 The crown touched 6-week lows against the euro on Monday as Czech inflation unexpectedly slowed, while the U.S.-China trade war helped drive down stocks and government bond yields in Central Europe. April Czech annual inflation dropped to 2.8%. The crown traded at 25.77 against the euro at 1304 GMT, down 0.1 percent, even though it was off 25.79 reached after the inflation figures. The Czech central bank (CNB) increased its interest rates for the eighth time in two years early this month after inflation rose well above its 2% target. Monday's CPI figures add to expectations that the bank is likely to pause its rate hikes for the rest of 2019 but could move either way later. If Britain quits the European Union without a deal or the euro zone economy slows, the next move may be a cut, Erste group analyst Jiri Polansky said in a note, adding that improving euro zone economic data could lead to a hike. Goldman Sachs analysts said a hike remained the likely next move. "We continue to think that implied rates for 2020 are too low," they said in a note. The zloty also eased. The relatively volatile forint reversed its early fall as the euro also strengthened against the greenback. Warsaw led a decline in regional equity indexes. Its almost 1.5 percent fall was mainly driven by copper producer KGHM, which shed 3.8 percent. The head of its Chilean peer Antofagasta said the U.S.-China trade war had slashed the price of copper, which registered its fourth consecutive weekly fall last week. The trade conflict between the world's two biggest economies has cut risk appetite in global markets, weighing on stock prices and inflation and interest rate expectations. Luxury car makers Daimler AG and BMW are putting their investments in Hungary on hold as the industry struggles with lower demand and the threat of higher U.S. auto tariffs on car imports from Europe, German media reported. U.S. President Donald Trump was due to meet visiting Hungarian Prime Minister Viktor Orban later on Monday. First-quarter economic output figures due from the region's main economies later this week are likely to show growth still outpaced the euro zone though at a slower rate except for Hungary, where analysts project steady 5.1% annual growth. The Polish and Romanian central banks are expected to keep their interest rates on hold on Wednesday. The leu bucked the weaker regional trend, trading at 4.761 versus the euro, after Romanian figures showed a surprise rise in annual inflation to 4.1% in April, the region's highest level. CEE SNAPSHOT AT MARKETS 1504 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7700 25.7400 -0.12% -0.24% crown > Hungary <EURHUF= 323.5500 323.7500 +0.06% -0.76% forint > Polish <EURPLN= 4.3030 4.2989 -0.10% -0.31% zloty > Romanian <EURRON= 4.7610 4.7615 +0.01% -2.25% leu > Croatian <EURHRK= 7.4065 7.4055 -0.01% +0.05% kuna > Serbian <EURRSD= 117.8500 117.9500 +0.08% +0.38% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1043.02 1049.640 -0.63% +5.72% 0 Budapest 40625.91 41068.21 -1.08% +3.80% Warsaw 2160.27 2191.91 -1.44% -5.11% Bucharest 8194.95 8304.58 -1.32% +10.99% Ljubljana <.SBITOP 864.52 868.67 -0.48% +7.49% > Zagreb 1838.18 1840.78 -0.14% +5.11% Belgrade <.BELEX1 732.55 731.71 +0.11% -3.83% 5> Sofia 569.33 571.54 -0.39% -4.23% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6300 -0.1500 +226bps -15bps R> 5-year <CZ5YT=R 1.7440 -0.0510 +222bps -5bps R> 10-year <CZ10YT= 1.8900 0.0300 +195bps +4bps RR> Poland 2-year <PL2YT=R 1.6460 -0.0170 +227bps -2bps R> 5-year <PL5YT=R 2.2380 -0.0370 +271bps -3bps R> 10-year <PL10YT= 2.8580 -0.0450 +292bps -4bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.24 2.25 2.23 2.20 <PRIBOR= > Hungary 0.34 0.49 0.65 0.16 Poland 1.74 1.75 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest and Jason Hovet in Prague Editing by Emelia Sithole-Matarise/Mark Heinrich)

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