* Hungarian central bank IRS announcement lifts bond prices
* Currencies, stocks mostly rebound after retreat from highs
* Bucharest stocks hit highest level since early
(Recasts with Hungarian government bonds, forint and zloty
By Sandor Peto and Robert Muller
BUDAPEST/PRAGUE, May 24 Hungarian government
bonds strengthened on Wednesday after the central bank said that
it would offer interest rate swaps which could make bond buying
more attractive to commercial banks.
Central European government bonds were mixed while
currencies and stocks mostly rebounded after a retreat in the
past two sessions due to profit-taking.
China's credit rating downgrade by Moody's did not have an
impact and with a lack of major international market moving
factors, investors are watching technical issues and comments
from central bankers in the region, market participants said.
Hungarian central bank deputy Governor Marton Nagy told
Reuters late on Tuesday that the bank's record low base rate
could remain unchanged until 2019 or even longer.
Loose policy from the region's most dovish central bank was
not a surprise.
But government bonds got a boost from an announcement by the
bank that it would launch the second phase of its programme to
boost market-based lending to small and medium-sized businesses.
Under that programme, the central bank will offer interest
rate swaps, which commercial banks earlier widely used to hedge
government bond buying.
Hungarian bond yields fell by 4-5 basis points along the
curve, with 10-year papers trading at 3.03 percent.
The forint jumped to a 3-month high against the euro,
touching 307.20, and traded at 307.65 at 1423 GMT, up 0.3
percent, despite the central bank's dovish message.
"Risk on is generally back now (in global markets), and with
that backdrop the forint is unable to weaken in the short term,"
one Budapest-based currency dealer said.
The zloty firmed 0.5 percent to 4.1795 against the
The Czech crown firmed slightly, after rebounding
from an early easing.
While a pick-up in economic growth backs currencies across
the region, the crown could get more support from the central
bank's recent rhetoric than its regional peers, analysts said.
The head of Erste Group Bank's Czech asset management
company said the Czech central bank (CNB) could be the first in
the region to start lifting interest rates.
CNB board member Vojtech Benda told Reuters that low
interest rates boost housing prices into a spiral the bank will
need to slow.
He said the timing of a rate hike could hinge on
third-quarter economic data and that more crown firming would
mean fewer hikes, although hikes are coming anyway.
Bucharest's stock index hit a new 9-year high.
Sentiment has been lifted by an initial public offering and
listing by Digi Communications this month.
Budapest's index shed 1.4 percent, mainly driven by
profit-taking which has pushed back the stocks of OTP Bank
from 3-month highs reached on Monday.
CEE MARKETS SNAPSH AT 1623 CET
Latest Previo Daily Change
bid close change in
Czech crown 26.438 26.452 +0.05 2.15%
0 0 %
Hungary 307.65 308.55 +0.29 0.38%
forint 00 50 %
Polish zloty 4.1795 4.2014 +0.52 5.37%
Romanian leu 4.5515 4.5554 +0.09 -0.36%
Croatian kuna 7.4270 7.4305 +0.05 1.72%
Serbian dinar 122.62 122.88 +0.22 0.60%
00 50 %
Note: daily calculated previo close 1800
change from us at CET
Latest Previo Daily Change
close change in
Prague 1011.1 1007.9 +0.32 +9.72
7 1 % %
Budapest 34234. 34730. -1.43% +6.97
24 94 %
Warsaw 2316.5 2307.8 +0.38 +18.9
5 4 % 2%
Bucharest 8558.2 8508.2 +0.59 +20.7
7 8 % 9%
Ljubljana 788.54 791.34 -0.35% +9.89
Zagreb 1853.0 1850.8 +0.12 -7.11%
4 6 %
Belgrade 735.64 739.12 -0.47% +2.55
Sofia 660.74 655.00 +0.88 +12.6
Yield Yield Spread Daily
(bid) change vs change
2-year -0.182 0 +047b +1bps
5-year -0.019 0.003 +032b +1bps
10-year 0.847 0 +045b +0bps
2-year 1.938 -0.019 +259b -1bps
5-year 2.765 -0.006 +310b +0bps
10-year 3.338 0.007 +294b +1bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech Rep <PR 0.37 0.46 0.54 0
Hungary <BU 0.19 0.22 0.29 0.16
Poland <WI 1.755 1.777 1.812 1.73
Note: FRA are for ask
(Editing by Ed Osmond)