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4 months ago
CEE MARKETS-Forint touches one-year low vs zloty, politics weigh
April 19, 2017 / 10:16 AM / 4 months ago

CEE MARKETS-Forint touches one-year low vs zloty, politics weigh

    * Hungary's friction with Brussels weighs on forint
    * Forint weakness unlikely to make Hungarian cbank less
dovish
    * Zloty may firm after France's first-round elections
-dealers
    * Bucharest stocks retreat from 9-year highs

    By Sandor Peto and Marcin Goettig
    BUDAPEST/WARSAW, April 19 (Reuters) - The forint rebounded
from a one-year low against the zloty on Wednesday due to
technical factors but could slump again given Hungary's loose
monetary policy and fresh political uncertainty, dealers said.
    Geopolitical risks including France's upcoming elections
have weighed on both currencies in the past weeks. On Wednesday
they moved in opposite directions versus the euro.
    The Hungarian unit firmed and the zloty
eased 0.1 percent against the euro. The forint rebounded versus
the zloty after piercing the key 74 level against the Polish
currency. Forint-zloty cross trade is normally one of
the most liquid among Central European currencies.
    The forint traded at 73.79 against the zloty, but dealers
said it may soon slide again past 74.15 towards its weakest
levels since 2015.
    The zloty has outperformed the forint since late 2016 when
worries eased that Poland's nationalist government would stick
with unfriendly policies towards foreign businesses and trigger
a deterioration in the country's credit ratings.    
    The forint's relative attractiveness has suffered from lower
than expected March inflation figures -  signalling dovish
monetary policies.
    Another dampening factor has been friction between Budapest
and the European Commission and Germany over a law targeting the
Central European University, founded by financier George Soros.
The new legislation by Prime Minister Viktor Orban's nationalist
government touched off a wave of protests in Budapest over an
alleged manoeuvre to silence critical expression.
    "Currencies react more sensitively to such things than bonds
as turnover in both the forint and the zloty (spot foreign
currency markets) has declined," one Budapest-based dealer said.
    The forint, trading at 313 against the euro, was off
four-month lows touched at 314.36 early this week, but this is
unlikely to make the Hungarian central bank, which will meet on
Tuesday, less dovish, dealers said.
    Hungarian government bond yields dropped 2-3 basis points
and traded near multi-month lows, just like slightly higher
Polish 10- and 5-year yields.
    "We think that the data published this week in Poland
(especially today's labour market data) will stop the decline in
yields on the short end or cause yield to rise slightly," ING
analysts said in a note.
    "Demand for bonds in the 5+ years segment will likely remain
strong due to the strong Bund(s)."
    ING analysts added that the zloty, which was trading at 4.24
against the euro, could strengthen through 4.2 next week if
Sunday's first-round French presidential elections reduce
political risks.
    Investors have been concerned that the far-right or far-left
candidate - both anti-EU and anti-euro - might make France's
decisive second round on May 7.
    Regional stock indices mostly rose slightly, except for
Bucharest which gave up some ground after hitting a
9-year high on Tuesday.
    
              CEE        SNAPS   AT  1053          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.80  26.79  -0.01  0.77%
                            00     60      %  
 Hungary                 313.0  313.4   +0.1  -1.34
 forint                    000    400     4%      %
 Polish                  4.240  4.236  -0.08  3.86%
 zloty                       2      6      %  
 Romanian                4.528  4.524  -0.09  0.15%
 leu                         3      3      %  
 Croatian                7.454  7.432  -0.29  1.36%
 kuna                        0      5      %  
 Serbian                 123.5  123.5   +0.0  -0.15
 dinar                     300    850     4%      %
 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                  970.6  968.0   +0.2   +5.3
                             4      6     7%     2%
 Budapest                32681  32521   +0.4   +2.1
                           .43    .58     9%     2%
 Warsaw                  2251.  2237.   +0.6   +15.
                            77     36     4%    60%
 Bucharest               8187.  8232.  -0.55   +15.
                            02     65      %    55%
 Ljubljana               772.7  778.1  -0.69   +7.6
                             7      6      %     9%
 Zagreb                  1953.  1944.   +0.4  -2.05
                            93     72     7%      %
 Belgrade     <.BELEX15  725.5  726.6  -0.16   +1.1
              >              2      9      %     4%
 Sofia                   657.8  652.8   +0.7   +12.
                             0      9     5%    17%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.04   0.04   +078   +1bp
              >              5           bps      s
   5-year     <CZ5YT=RR  0.234  -0.00   +074  -2bps
              >                     2    bps  
   10-year    <CZ10YT=R  0.992  -0.08   +081  -9bps
              R>                    3    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.003  0.008   +283  -2bps
              >                          bps  
   5-year     <PL5YT=RR   2.84  0.018   +335   +1bp
              >                          bps      s
   10-year    <PL10YT=R  3.368  -0.01   +319  -2bps
              R>                    2    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <    0.3   0.31   0.37      0
              PRIBOR=>                        
 Hungary              <   0.21   0.28   0.35   0.16
              BUBOR=>                         
 Poland               <  1.746  1.757  1.792   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Editing by Mark Heinrich)
  
 
 

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