October 2, 2019 / 9:28 AM / 2 months ago

CEE MARKETS-Forint, zloty lifted higher, stocks lose ground

    PRAGUE, Oct 2 (Reuters) - Hungary's forint led central
European currencies higher on Wednesday during a seesaw week,
while further gloom from major world economies pushed the
region's stock markets lower.
    The forint moved off a record low touched last week and
Poland's zloty edged up before a central bank rate decision,
with markets widely expecting it to maintain rates at 1.5%.
    "The baseline scenario still assumes monetary policy
stability at least until the end of next year," Santander Bank
Polska said in a note.
    Czech and Hungarian central banks both kept interest rates
on hold last week amid a global easing bias as trade tensions
ramp up and economies slow. 
    However, central Europe's economies have so far been
resilient, propped up by domestic demand that is keeping
inflationary pressures up and putting policymakers into
wait-and-see mode.
    Before the Polish rate decision, the zloty gained
0.1% to 4.379 to the euro. 
    The zloty has drifted this week ahead of a European Court of
Justice ruling on Thursday on whether a bank in Poland broke the
law when it sold mortgages denominated in Swiss francs. 
    A ruling favouring the homeowners could unleash lawsuits
affecting Polish banking profits for years.
    Warsaw's blue-chip WIG20 fell 1.1% to lead the
region's bourses down. Prague lost nearly 1%, falling with
others after U.S. manufacturing activity tumbled.
    Among other currencies, Hungary's forint was bid
at 334.75 to the euro, 0.3% up on the day and off a record low
336.28. The Czech crown edged up to 25.759.
    Dealers in Prague and Budapest both said the currencies were
falling into ranges.
    The crown, though, is sitting near its strongest level since
mid-August after the central bank (CNB) kept a rate hike debate
alive at its meeting last week.
    "Although external factors will continue to keep the crown
in check, we expect the Czech currency to appreciate moderately
against the euro over the forecast horizon, not least due to the
solid domestic economy and the more restrictive CNB relative to
other central banks," Commerzbank said.
                                CEE MARKETS        SNAPSHOT    AT                        
                                                                 1058 CET                
                                                   Latest      Previous        Daily     Change
                                                   bid         close           change    in 2019
 EURCZK=    Czech crown                            25.7590     25.7880         +0.11%    -0.20%
 EURHUF=    Hungary forint                         334.7500    335.6800        +0.28%    -4.08%
 EURPLN=    Polish zloty                           4.3793      4.3844          +0.12%    -2.05%
 EURRON=    Romanian leu                           4.7495      4.7492          -0.01%    -2.01%
 EURHRK=    Croatian kuna                          7.4120      7.4125          +0.01%    -0.03%
 EURRSD=    Serbian dinar                          117.4000    117.4600        +0.05%    +0.77%
            Note: daily change  calculated from                                1800 CET  
                                                   Latest      Previous        Daily     Change
                                                               close           change    in 2019
 .PX        Prague                                 1021.34     1031.2500       -0.96%    +3.53%
 .BUX       Budapest                               39913.28    40112.38        -0.50%    +1.98%
 .WIG20     Warsaw                                 2129.45     2152.50         -1.07%    -6.46%
 .BETI      Bucharest                              9490.70     9552.68         -0.65%    +28.54%
 .SBITOP    Ljubljana                              858.42      860.18          -0.20%    +6.73%
 .CRBEX     Zagreb                                 1951.96     1953.77         -0.09%    +11.62%
 .BELEX15   Belgrade                               752.67      753.51          -0.11%    -1.18%
 .SOFIX     Sofia                                  565.67      569.32          -0.64%    -4.84%
                                                   Yield       Yield           Spread    Daily
                                                   (bid)       change          vs Bund   change in
            Czech Republic                                                               spread
 CZ2YT=RR   2-year                                 1.2890      -0.0030         +204bps   +0bps
 CZ5YT=RR   5-year                                 1.1020      -0.0880         +189bps   -9bps
 CZ10YT=RR  10-year                                1.3520      -0.0200         +190bps   -3bps
 PL2YT=RR   2-year                                 1.5110      -0.0040         +227bps   +0bps
 PL5YT=RR   5-year                                 1.7770      -0.0100         +257bps   -1bps
 PL10YT=RR  10-year                                2.0160      0.0080          +256bps   +0bps
                                FORWARD            RATE        AGREEMENT                 
                                                   3x6         6x9             9x12      3M interbank
            Czech Rep                              2.16        2.09            2.10      2.16
            Hungary                                0.28        0.33            0.37      0.00
            Poland                                 1.73        1.72            1.68      1.72
            Note: FRA quotes    are for ask prices                                       

 (Reporting by Jason Hovet in Prague, Alan Charlish in Warsaw
and Marton Dunai in Budapest; Editing by Alexander Smith)
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