May 3, 2017 / 9:44 AM / in 3 months

CEE MARKETS-Czech crown regains ground, shakes off political wobbles

6 Min Read

    By Krisztina  Than
    BUDAPEST, May 3 (Reuters) - The Czech crown
regained ground on Wednesday, a day  after Prime Minister
Bohuslav Sobotka announced that he would resign along with his
government, while other currencies in the region were also
steady or slightly firmer.
    With investors cautious ahead of the U.S. Federal Reserve's
two-day policy meeting, which could give clues regarding rate
hikes, stock markets mostly dropped. Budapest led losses,
easing 0.7 percent by 0914 GMT. 
    Sunday's second round of the French presidential election
added to global risks.
    After easing a little on Tuesday after Sobotka said his
government would resign by mid-May following a row with finance
minister Andrej Babis over Babis's past business dealings, the
Czech crown firmed 0.15 percent on Wednesday to 26.868 per euro.
    
    "EURCZK attempted to go slightly weaker at first (yesterday)
but quickly reverted ... back to previous levels, and we do not
expect any more major reaction as the story is hardly likely to
change the economic path of the country," Komercni Banka trader
Dalimil Vyskovsky said.
    Hungary's forint was flat. Polish markets are
closed on Wednesday.
    Sobotka has said he will seek a meeting with President Milos
Zeman to agree timing for the resignation and further steps. He
said the coalition could be recreated without Babis, or that an
election due in October could be moved forward.
    Despite the political wobbles, the crown is seen gaining
more than 4 percent against the euro in the coming year, lifted
by strong economic growth and likely monetary tightening, a
Reuters poll published on Wednesday showed. 
    After the Czech central bank's removal a month ago of the
cap which had kept the currency weaker than 27 against the euro
since 2013, the crown could outperform regional peers, the poll
suggested.
    Czech bonds have meanwhile been supported by their inclusion
in JP Morgan's emerging markets index, which means
index-tracking investors will need to buy them for their
portfolios.
    Central Europe's economies outperformed western European
economies last year and growth is seen strong this year as well,
helped by a solid inflow of European Union development funds and
loose monetary policies by local central banks. 
    
              CEE        SNAPS   AT  1115          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.86  26.90   +0.1  0.52%
                            80     90     5%  
 Hungary                 312.2  312.1  -0.01  -1.08
 forint                    000    800      %      %
 Polish                  4.202  4.205   +0.0  4.79%
 zloty                       5      0     6%  
 Romanian                4.550  4.549  -0.01  -0.33
 leu                         0      4      %      %
 Croatian                7.447  7.455   +0.1  1.44%
 kuna                        5      5     1%  
 Serbian                 123.0  123.1   +0.0  0.24%
 dinar                     500    200     6%  
 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                  997.2  1001.  -0.48   +8.2
                             2     98      %     0%
 Budapest                32680  32902  -0.68   +2.1
                           .00    .62      %     2%
 Bucharest               8239.  8220.   +0.2   +16.
                            02     10     3%    29%
 Ljubljana               778.3  782.3  -0.50   +8.4
                             8      2      %     7%
 Zagreb                  1894.  1902.  -0.43  -5.04
                            38     57      %      %
 Belgrade     <.BELEX15  720.8  720.6   +0.0   +0.4
              >              5      4     3%     9%
 Sofia                   666.1  660.5   +0.8   +13.
                             3      3     5%    59%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.18  -0.15   +055  -16bp
              >              1      9    bps      s
   5-year     <CZ5YT=RR  0.058  -0.05   +043  -6bps
              >                     4    bps  
   10-year    <CZ10YT=R  0.872      0   +054   +0bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.33   0.39    0.5      0
              PRIBOR=>                        
 Hungary              <   0.25   0.33   0.45   0.16
              BUBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Jason Hovet in Prague; Editing by
Catherine Evans)
  
 
 

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