March 28, 2017 / 8:21 AM / 5 months ago

CEE MARKETS-Crown near 3-mth high in forwards, forint steady before rate meeting

    BUDAPEST/PRAGUE, March 28 (Reuters) - The Czech crown
 was at a three-month-high in future deals on Tuesday
as markets readied for an expected removal of an exchange rate
floor.
    Hungary's forint was stable ahead of Tuesday's
interest rate decision.
    To fight deflation risks, the Czech central bank introduced
a cap in late 2013 to keep the crown weaker than 27 against the
euro in the spot market .
    But with price growth back to normal, most analysts expect
an exit from the "weak crown" regime in April or May.
    Strong interest in crown forwards up to a one-month maturity
sent the crown to a three-month-high at 26.93 per
euro in early trade, extending gains from Monday according to
Reuters data.
    "On Thursday the board members of the Czech National Bank
meet for the last time before the end of the hard commitment,"
analysts at Raiffeisen Bank said in a note.
    "The hard commitment to defend the Czech currency at the
limit EUR/CZK 27 or above ends this Friday and after this
'anything can happen'," the analysts said.
    In Hungary, where inflation has also approached the central
bank's policy anchor, the Monetary Council holds a rate-setting
meeting later in the day where it is widely expected to keep the
base rate at a record-low 0.9 percent.
    However, central Europe's most dovish central bank could
announce a further reduction in the amount of funds commercial
banks can keep in its 3-month deposits as it seeks to loosen
monetary conditions with targeted unconventional measures.
    The forint was nailed to the 309 per euro mark in early
trade.
    "The question is how much further the 3-month stock will be
lowered, as well as the new inflation and economic growth
forecasts," a Budapest-based currency dealer said.
    "If there is a bigger change, that could spark some
activity, but I expect the usual communication," the trader
said.
    The bank will announce its rate decision at 1200 GMT,
followed by new economic forecasts and the size of the
three-month deposits at 1300 GMT.
    The median projection of analysts polled by Reuters sees a
150 billion forint cut in the 3-month deposit limit for the end
of June, to 600 billion forints, after an earlier cut to 750
billion forints by the end of this month.
               CEE MARKETS   SNAPSHOT     AT  0937 CET                
                             CURRENCIES                               
                             Latest      Previous  Daily     Change
                             bid         close     change    in 2017
 Czech crown                    27.0200   27.0190    +0.00%     -0.05%
 Hungary                       309.1000  309.1000    +0.00%     -0.09%
 forint                                                      
 Polish zloty                    4.2520    4.2448    -0.17%      3.57%
 Romanian leu                    4.5520    4.5538    +0.04%     -0.37%
 Croatian                        7.4300    7.4385    +0.11%      1.68%
 kuna                                                        
 Serbian                       123.8600  123.9500    +0.07%     -0.41%
 dinar                                                       
 Note: daily   calculated    previous    close at  1800 CET           
 change        from                                          
                             STOCKS                                   
                             Latest      Previous  Daily     Change
                                         close     change    in 2017
 Prague                          984.59    979.45    +0.52%     +6.83%
 Budapest                      32123.67  31876.22    +0.78%     +0.38%
 Warsaw                         2213.96   2201.88    +0.55%    +13.66%
 Bucharest                      7959.27   7961.02    -0.02%    +12.34%
 Ljubljana                       782.64    791.11    -1.07%     +9.07%
 Zagreb                         2094.72   2096.80    -0.10%     +5.01%
 Belgrade                        743.14    744.49    -0.18%     +3.59%
 Sofia                           638.50    638.34    +0.03%     +8.88%
                             BONDS                                    
                             Yield       Yield     Spread    Daily
                             (bid)       change    vs Bund   change in
 Czech                                                       spread
 Republic                                                    
   2-year                        -0.491         0   +020bps      +0bps
   5-year                         0.211     0.065   +051bps      +7bps
   10-year                        0.979    -0.009   +058bps      +0bps
 Poland                                                               
   2-year                         2.041    -0.008   +273bps      -1bps
   5-year                         2.959     0.022   +326bps      +3bps
   10-year                        3.543     0.006   +314bps      +1bps
               FORWARD       RATE        AGREEMENT                    
                             3x6         6x9       9x12      3M
                                                             interbank
 Czech Rep             <PRI        0.29      0.33       0.4          0
               BOR=>                                         
 Hungary               <BUB        0.27      0.34      0.46       0.21
               OR=>                                          
 Poland                <WIB        1.77     1.785     1.825       1.73
               OR=>                                          
 Note: FRA     are for ask                                            
 quotes        prices                                        
    

 (Writing by Gergely Szakacs; Editing by Jeremy Gaunt)
  
 
 

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