January 12, 2017 / 11:08 AM / 7 months ago

CEE MARKETS-Currencies firm, investors eye Polish parliament row

* Currencies firm as dollar retreats, Turkish lira rebounds
    * Parliament standoff, downgrade risk keep lid on zloty
    * Polish bonds firm as central bank sees no rate hike in
2017
    * Serbian central bank seen keeping rates on hold

    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Jan 12 (Reuters) - The zloty rebounded from
an early fall against the euro on Thursday as a general retreat
in the U.S. dollar buoyed Central European currencies, though
investors remain worried about the blockade of Poland's
parliament by opposition lawmakers.
    The opposition Civic Platform party has been blocking the
podium in parliament's main hall since mid-December in protest
at what it says was an illegal action by the Polish government
to pass the 2017 budget.  
    The zloty was trading at 4.3697 against the euro
by 0935 GMT, up slightly on the day after erasing an early 0.1
percent decline but underperforming Hungary's forint,
up 0.2 percent. 
    Regional currencies got further support from a retreat of
the dollar in global markets and a steadier Turkish lira
. Market turmoil in Turkey has posed some risks to
Central Europe's liquid currencies. 
    Polish government bonds were helped by comments from central
bank chief Adam Glapinski, who said after a meeting on Wednesday
he saw no reason to lift interest rates from their record low
levels this year, even though inflation has rebounded.
 
    The yield on Polish 10-year bonds fell 5 basis points to
3.4965 percent. 
    Central Europe's economies have also shown some signs of
picking up after a slowdown last year, but November industrial
output figures for Romania and Hungary on Thursday were weak.
    The risk that Moody's will downgrade Poland's credit rating
in a review on Friday is also keeping a lid on asset prices,
Raiffeisen analyst Gintaras Shlizhyus said in a note.
    "(The parliament standoff) can have damaging impact on PLN
(zloty) FX market today," he said.
    Czech bonds were steady after surging on Wednesday as
expectations that the central bank will abandon its crown cap in
mid-2017 pushed the yield at an auction of 2018 bonds to a
record low. 
    The dinar firmed slightly to 123.71 against the
euro ahead of a meeting of the Serbian central bank. 
    It is expected to keep the region's highest interest rates
on hold again even though inflation reached the lower end of the
bank's 1.5-4.5 percent target range in November.
    The bank is cautious ahead of presidential elections in
Serbia in May and a likely further rise in U.S. interest rates.
    It has been buying the dinar in the market in recent days to
counter a seasonal rise in demand for foreign currencies.
 
              CEE        SNAPS   AT  1035          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            10     45     1%      %
 Hungary                 307.5  308.2   +0.2  0.41%
 forint                    500    400     2%  
 Polish                  4.369  4.372   +0.0  0.78%
 zloty                       7      0     5%  
 Romanian                4.491  4.496   +0.1  0.97%
 leu                         5      6     1%  
 Croatian                7.543  7.553   +0.1  0.16%
 kuna                        0      5     4%  
 Serbian                 123.7  123.8   +0.0  -0.29
 dinar                     100    000     7%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  928.7  927.9   +0.0   +0.7
                             0      3     8%     7%
 Budapest                32990  32972   +0.0   +3.0
                           .84    .20     6%     9%
 Warsaw                  2020.  2030.  -0.49   +3.7
                            66     64      %     3%
 Bucharest               7249.  7238.   +0.1   +2.3
                            61     70     5%     2%
 Ljubljana               742.1  745.9  -0.51   +3.4
                             7      7      %     3%
 Zagreb                  2074.  2078.  -0.21   +3.9
                            41     74      %     9%
 Belgrade     <.BELEX15  707.2  708.2  -0.14  -1.41
              >              8      5      %      %
 Sofia                   611.0  610.9   +0.0   +4.2
                             5      9     1%     0%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -1.26      0  -055b   +0bp
              >              8            ps      s
   5-year     <CZ5YT=RR  -0.32  -0.03   +017  -3bps
              >              2      5    bps  
   10-year    <CZ10YT=R  0.374  0.005   +015   +3bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  1.982  -0.01   +270  -1bps
              >                     4    bps  
   5-year     <PL5YT=RR  2.824  -0.04   +331  -3bps
              >                          bps  
   10-year    <PL10YT=R  3.511  -0.04   +329  -2bps
              R>                    6    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.16   0.09   0.09      0
              PRIBOR=>                        
 Hungary              <   0.37   0.44   0.53   0.31
              BUBOR=>                         
 Poland               <   1.76   1.78  1.855   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Editing by Catherine Evans)

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