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CEE MARKETS-Zloty rebounds, politics weigh on Romanian assets
December 19, 2016 / 3:32 PM / 10 months ago

CEE MARKETS-Zloty rebounds, politics weigh on Romanian assets

* Anti-government protests weigh on Polish assets in early
trade
    * Polish stocks rebound on oil rise, zloty on economic data
    * Romanian cuts bill auction, 10-year yield at 6-month high
    * Hungarian central bank seen boosting liquidity further

 (Recasts, with Polish economic figures, Romanian auction, new
analyst comments)
    By Sandor Peto
    BUDAPEST, Dec 19 (Reuters) - Poland's zloty hit a four-week
high on Monday, shrugging off concerns over anti-government
protests in parliament and strengthening on data showing a
pick-up in the economy.
    Polish opposition lawmakers occupied the main hall of
parliament for a fourth day, in a protest against the ruling PiS
party, which they say is undermining democracy and the
constitution. 
    Tensions flared on Friday over government plans to limit
media access to parliament, and the standoff escalated when
government lawmakers moved a planned vote on the 2017 budget to
a side room in the building.
    While the zloty opened weaker against the euro on
concerns over the political situation, by late afternoon it was
trading at 4.407, 0.2 percent firmer on the day, after data
showed faster than expected growth in industrial output, retail
sales and the producer price index in November.
    The figures may take some pressure off the central bank to
ease policy to counter a slowdown in economic growth, said Erste
analyst Katarzyna Rzentarzewska in a note.
    Polish stocks rebounded from an early fall, with Warsaw's
blue-chip equities index up 0.2 percent as a rise in
crude prices helped heavyweight oil firms across the region
including PKN Orlen, which gained 2.9 percent. 
    Concerns over the rule of law in Poland and policies that
may add to government spending could weigh on assets there next
year, however, although an economic improvement may support
them, analysts said.
    Romania faces similar worries over its budget. 
    Its government bond yields edged up by a few basis points,
bucking the European trend of a drop in yields. Its 10-year
yield touched a six-month high and was bid at 3.73 percent late
in the session. Romania sold less than planned at an auction of
5-month bills, with the government's borrowing costs climbing.
 
    The Social Democrats, who won a general election a week ago,
are expected to form a government before the end of the year.
Investors are concerned that they may widen the budget deficit
to more than the EU's threshold next year, however.
    Hungary's bond yield curve flattened a bit, as in Poland.
Yields dropped, with 10-year papers trading at 3.26 percent,
down 6 basis points from Friday's fixing.
    The Hungarian central bank may keep pushing cash into the
market through its swap operations and is also expected to limit
further the amount of funds commercial banks can place in its
three-month deposits. The central bank is hoping to encourage
banks to lend this extra money out and buy government debt and
help push market interest rates lower.
    
           CEE      SNAP   AT  1516       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.0
 crown     =>        210   325   04%    9%
 Hungary   <EURHUF  311.  312.   +0.  1.06
 forint    =>       3500  6900   43%     %
 Polish    <EURPLN  4.40  4.41   +0.  -3.3
 zloty     =>         70    63   21%    8%
 Romanian  <EURRON  4.51  4.51  -0.1  0.04
 leu       =>         70    17    2%     %
 Croatian  <EURHRK  7.53  7.53   +0.  1.41
 kuna      =>         25    40   02%     %
 Serbian   <EURRSD  123.  123.  -0.1  -1.6
 dinar     =>       5100  3100    6%    5%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             916.  917.  -0.1  -4.2
                      21    59    5%    0%
 Budapest           3177  3187  -0.3   +32
                    4.55  6.26    2%  .83%
 Warsaw    <.WIG20  1921  1918   +0.   +3.
           >         .97   .54   18%   38%
 Buchares           7065  7056   +0.   +0.
 t                   .27   .79   12%   87%
 Ljubljan  <.SBITO  703.  710.  -0.9   +1.
 a         P>         89    45    2%   11%
 Zagreb    <.CRBEX  1967  1968  -0.0   +16
           >         .57   .33    4%  .45%
 Belgrade  <.BELEX  718.  721.  -0.3   +11
           15>        38    17    9%  .53%
 Sofia     <.SOFIX  576.  578.  -0.3   +25
           >          35    45    6%  .05%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.8  -0.0  -008   +0b
           RR>        75    03   bps    ps
   5-year  <CZ5YT=  -0.2  -0.0   +03  -3bp
           RR>              55  0bps     s
           <CZ10YT  0.50  -0.0   +02   +1b
 10-year   =RR>        4    15  2bps    ps
 Poland                                   
   2-year  <PL2YT=  1.99     0   +27   +1b
           RR>         6        9bps    ps
   5-year  <PL5YT=  2.76  -0.0   +32   +0b
           RR>         5    26  6bps    ps
           <PL10YT  3.45  -0.0   +31   +0b
 10-year   =RR>        6    24  7bps    ps
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.24   0.2  0.18     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.35  0.39  0.48  0.39
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.74  1.76  1.79  1.73
           ><WIBOR     5     5     5  
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 
 (Editing by Hugh Lawson)

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