June 7, 2017 / 3:57 PM / a month ago

CEE MARKETS-Zloty eases, central bank chief sees no rate hike until end-2018

7 Min Read

    * Zloty retreats and other CEE currencies are mixed
    * Investors hold breath before British vote and ECB meeting
    * Romania to scale back wage hikes; leu eases

 (Recasts with Polish central bank decision and comments)
    By Sandor Peto
    BUDAPEST, June 7 (Reuters) - The zloty weakened against the
euro on Wednesday as the Polish central bank kept interest rates
on hold and its governor reiterated that he did not expect them
to rise until the end of next year.
    Central European assets were generally rangebound ahead of
key global events on Thursday.
    "The big events will be the British elections, the testimony
of (former FBI Director James) Comey (about last year's U.S.
elections), and the ECB's meeting," one Budapest-based fixed
income trader said.
    The Polish bank kept its main interest rate unchanged at a
record low 1.5 percent, as expected.
    Analysts in a Reuters poll put the likely date of a rate
hike in the third quarter of 2018, after projecting the second
quarter a month ago.
    But the bank's governor Adam Glapinski reiterated that he
personally expected that rates would not be raised until the end
of 2018. He also said the bank was not concerned about the
zloty's recent gains.
    The zloty, after an initial rebound from two-week lows set
on Tuesday, eased 0.1 percent against the euro, hovering at the
4.2 psychological line.
    It is still near the nine-month high of 4.1619 it hit last
month. Glapinski said consumer confidence was the highest in
Poland for 30 years, while inflation had stabilised and might
even fall slightly.
    Elsewhere in the region, the forint eased 0.1
percent, after disappointing Hungarian and Czech industrial
output figures. 
    Output fell in April by 3 percent in annual terms in
Hungary, although analysts had predicted a rise. A 2.5 percent
Czech decline was more than forecast.   
    Analysts said the output fall was at least partly caused by
fewer working days due to the Easter holidays.
    The leu eased 0.1 percent to 4.5735, trading near
last month's four-year highs.
    Romania kept its first-quarter GDP growth estimate unchanged
at a robust 5.7 percent. Finance Minister Viorel Stefan said on
Tuesday Romania would scale back public sector wage hikes next
year to ensure it meets budget targets.
    Markets remain cautious as the government still plans wage
hikes and tax cuts that may boost the the budget deficit.
    
                CEE MARKETS  SNAPSH   AT  1705 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.310  26.332   +0.09   2.65%
                                  0       5       %  
 Hungary                     308.18  308.00  -0.06%   0.21%
 forint                          00      00          
 Polish zloty                4.1957  4.1926  -0.08%   4.96%
 Romanian leu                4.5735  4.5675  -0.13%  -0.84%
 Croatian kuna               7.4045  7.4075   +0.04   2.03%
                                                  %  
 Serbian dinar               122.31  122.29  -0.02%   0.85%
                                 00      00          
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1005.6  1005.9  -0.03%   +9.12
                                  2       6               %
 Budapest                    35021.  34926.   +0.27   +9.43
                                 75      99       %       %
 Warsaw                      2308.6  2303.6   +0.22   +18.5
                                  4       8       %      2%
 Bucharest                   8686.6  8707.4  -0.24%   +22.6
                                  2       3              0%
 Ljubljana                   793.09  798.33  -0.66%   +10.5
                                                         2%
 Zagreb                      1821.0  1827.9  -0.38%  -8.71%
                                  0       1          
 Belgrade                    722.55  720.38   +0.30   +0.72
                                                  %       %
 Sofia                       681.10  675.82   +0.78   +16.1
                                                  %      4%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                    -0.071       0   +066b   +0bps
                                                 ps  
   5-year                     -0.13   0.044   +033b   +4bps
                                                 ps  
   10-year                    0.789       0   +054b   +1bps
                                                 ps  
 Poland                                                    
   2-year                     1.905   0.003   +264b   +1bps
                                                 ps  
   5-year                     2.625   0.007   +308b   +1bps
                                                 ps  
   10-year                     3.19  -0.018   +294b   -1bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.34    0.41    0.47       0
                IBOR=>                               
 Hungary                <BU    0.19    0.23    0.29    0.15
                BOR=>                                
 Poland                 <WI   1.753   1.767   1.794    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
 (Additional reporting by Luiza Ilie in Bucharest and Bartosz
Chmielewski in Warsaw; Editing by Andrew Roche)
  
 
 

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