June 20, 2017 / 9:00 AM / 2 months ago

CEE MARKETS-Forint steady ahead of rate meeting, stocks edge lower

    BUDAPEST, June 20 (Reuters) - The Hungarian forint
held steady ahead of a Tuesday policy meeting by the National
Bank of Hungary (NBH), when it is expected to keep its base rate
on hold but decide to pump more liquidity into interbank
markets.
    At 0811 GMT, most central European currencies were little
changed, with the Romanian leu gaining 0.1 percent and
the Polish zloty shedding 0.1 percent. Main stock
markets were a tad weaker after Monday's rally.
    Analysts polled by Reuters expect Hungary's central bank to
keep its base rate at a record-low 0.9 percent at least
until the second quarter of 2019.
    But the NBH, regarded as Central Europe's most dovish
central bank, is expected to pump more liquidity into interbank
markets, continuing to squeeze funds out of its 3-month
deposits.
    A Budapest-based trader said that barring any unexpected
developments, the central bank's decisions would probably have a
neutral to slightly negative effect on the currency market,
projecting a post-meeting range for the forint of 307.30 to
308.50 versus the euro.
    The Czech crown was 0.07 percent weaker at 26.20
versus the euro, remaining on the strong side of the former cap
on its value at 27 to the euro. The Czech central bank lifted
the cap in April, abandoning a weak-crown policy.  
    The average crown exchange rate has strengthened by 1.6
percent to the euro since April, trading at an average of 26.58.
    "So far there has not been sufficient tightening of monetary
conditions via the exchange rate, which still supports the need
to tighten conditions by raising the basic interest rates. We
expect the central bank to start the tightening cycle in the
last quarter of this year," said Jakub Seidler, ING chief
economist for the Czech Republic.
    "The crown should break through the psychologically
important level of 26 to the euro in the second half of the
year, but in the short term it can be pressed by the dividend
season, so the relatively fast appreciation from recent weeks is
less likely."
    The crown should strengthen to 25.75 per euro in the next 12
months according to the median forecast of analysts in a May
28-June 1 Reuters poll.
    
               CEE MARKETS  SNAPSH   AT  1011 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.202  26.184  -0.07%   3.07%
                                 0       0          
 Hungary                    307.95  308.11   +0.05   0.28%
 forint                         00      50       %  
 Polish zloty               4.2220  4.2173  -0.11%   4.31%
 Romanian leu               4.5900  4.5956   +0.12  -1.20%
                                                 %  
 Croatian                   7.4180  7.4153  -0.04%   1.85%
 kuna                                               
 Serbian                    122.00  121.82  -0.15%   1.11%
 dinar                          00      00          
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1001.8  1004.0  -0.22%   +8.71
                                 6       3               %
 Budapest                   35944.  35948.  -0.01%   +12.3
                                53      41              2%
 Warsaw                     2322.7  2334.2  -0.49%   +19.2
                                 3       7              4%
 Bucharest                  8432.8  8412.2   +0.25   +19.0
                                 9       5       %      2%
 Ljubljana                  781.53  784.91  -0.43%   +8.91
                                                         %
 Zagreb                     1858.0  1857.9   +0.01  -6.86%
                                 1       0       %  
 Belgrade                   707.48  708.39  -0.13%  -1.38%
 Sofia                      686.90  685.96   +0.14   +17.1
                                                 %      3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                        0       0   +066b   +1bps
                                                ps  
   5-year                   -0.023  -0.002   +038b   +1bps
                                                ps  
   10-year                    0.94       0   +067b   +1bps
                                                ps  
 Poland                                                   
   2-year                    1.928  -0.079   +259b   -7bps
                                                ps  
   5-year                    2.589       0   +299b   +1bps
                                                ps  
   10-year                   3.162   0.002   +289b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.34    0.42    0.51       0
               IBOR=>                               
 Hungary               <BU    0.19    0.22    0.27    0.15
               BOR=>                                
 Poland                <WI    1.75   1.765   1.794    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Robert Muller and Gergely Szakacs; Editing by
Raissa Kasolowsky)
  
 
 

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