June 30, 2020 / 9:46 AM / a month ago

CEE MARKETS-Forint drifts to 2-month low on rate cut bets

    PRAGUE, June 30 (Reuters) - Hungary's forint drifted to a
two-month low on Tuesday as markets bet on further rate cuts
from the central bank after  the first reduction in four years
last week.
    The currency led losses among peers in central Europe, with
the region shaky amid global fears of a jump in new coronavirus
cases. Stock markets also edged lower.
    The forint is down almost 4% from a three-month
high hit on June 10.
    It had weakened 0.3% on the day by 0856 GMT, to trade at
357.15 to the euro, the weakest since the end of April.
    Erste Group Bank analysts said weakening toward 360 was
possible. The forint hit a record low 369.54 in March, during
the worst of the market rout due to the coronavirus pandemic.
    The central bank has sought to balance keeping the forint on
stable ground with loosening policy through unconventional steps
to help a virus-hit economy. However, last week it cut its base
rate by 15 basis points to 0.75%, the first move in four years.
    Markets have priced in more cuts although Deputy Governor
Barnabas Virag said on Friday another 15 bps cut in July was
possible and that market pricing was exaggerated.
    Bank of America said the base rate could fall to 0.45% this
year. "The central bank is probably only trying to avoid
excessive HUF depreciation rather than advocating a stronger
currency," it said.
    "We think cautious steps and transparent communication are
key in deterring HUF shorts."
    Elsewhere, the Czech crown edged up to 26.792 per
euro, rebounding from a four-week low. Poland's zloty
dropped.
    On bond markets, the yield on Czech 10-year paper
 was bid at 0.839%, down more than a percentage point
from March peaks. 
    Data from the Czech finance ministry showed on Tuesday the
share of domestic bonds held by foreigners dropped to 36% in May
and is down from 40.77% seen at the end of February,
highlighting strong domestic demand for bonds as the central
bank cuts rates.
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1056              
                                     CET               
                                                              
                   CURRENC                                    
                   IES                                 
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  26.7920  26.8040   +0.04%   -5.08%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  357.150  356.195   -0.27%   -7.28%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.4655   4.4627   -0.06%   -4.68%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.8435   4.8437   +0.00%   -1.14%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.5710   7.5752   +0.06%   -1.66%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.520  117.585   +0.06%   +0.04%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                   STOCKS                                     
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2020
 .PX     Prague              924.62  924.680   -0.01%  -17.12%
                                           0           
 .BUX    Budapest           36192.0  36517.1   -0.89%  -21.46%
                                  3        7           
 .WIG20  Warsaw    <.WIG20  1762.76  1769.47   -0.38%  -18.01%
                   >                                   
 .BETI   Buchares           8613.71  8626.28   -0.15%  -13.67%
         t                                             
 .SBITO  Ljubljan  <.SBITO   850.53   847.88   +0.31%   -8.14%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1607.05  1604.55   +0.16%  -20.34%
                   >                                   
 .BELEX  Belgrade  <.BELEX   664.31   665.23   -0.14%  -17.14%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   454.03   453.92   +0.02%  -20.08%
                   >                                   
                                                              
                   BONDS                                      
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   0.1850   0.1230   +088bp   +12bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   0.4010  -0.0660   +111bp    -6bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   0.8390   0.0750   +131bp    +8bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   0.1700   0.0200   +087bp    +2bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   0.7650   0.0120   +147bp    +1bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.3690  -0.0110   +184bp    -1bps
 =RR     10-year   =RR>                             s  
                                                              
                   FRA                                        
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     0.28     0.28     0.29     0.34
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.61     0.56     0.53     0.74
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     0.21     0.22     0.25     0.26
                   ><WIBOR                             
                   =>                                  
         Note: FRA quotes are for                             
         ask prices                                    
         ********************************************         
         ******************                            
                                                              
 
 (Reporting by Jason Hovet in Prague and Gergely Szakacs in
Budapest; Editing by Shailesh Kuber)
  
 
 
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