September 12, 2019 / 9:27 AM / a month ago

CEE MARKETS-CEE FX eyes ECB stimulus news, forint regains some ground

    By Radu-Sorin Marinas
    BUCHAREST, Sept 12 (Reuters) - Central European currencies
firmed early on Thursday with Hungary's forint recovering some
ground on hopes of fresh stimulus by the European Central Bank
after it hit a record low of 333.46 to the euro the previous
day.
    The ECB is widely expected to introduce a package of
monetary easing and stimulus measures on Thursday to offset the
effects of a U.S.-Chinese trade war and global economic
slowdown.   
    "The forint reached a new all-time low versus the euro in
Wednesday afternoon trading, and then it rebounded somewhat,"
said brokerage Equilor.
    "The exchange rate could move in the range between 330 and
334 to the euro, but we are preparing for bigger movements
between 1300 and 1600 CET (due to the ECB)."
    By 0850 GMT, the forint rose 0.3% on the day to
trade at 331.32 to the euro. The Polish zloty and the
Czech crown edged up 0.1% to 4.3377 and 25.8850
respectively. The Romanian leu was flat at 4.7365.
    Prime Minister Viktor Orban's cabinet chief Gergely Gulyas
said the government had no exchange rate target when asked about
the forint's slide. "I don't think the current exchange rate
would give reason for any concerns," he said.
    Czech National Bank Vice-Governor Marek Mora said ECB's
monetary easing would be an anti-inflationary factor for the
Czech economy but that, at this moment, it was better to have a
"wait-and-see" approach to Czech rates.
    Mora added that Czech interest rates should stay steady over
the next year to keep domestic inflationary pressures under
control even as global central banks shift towards easing rates.

    In Poland, which ended an easing cycle in March 2015, the
Monetary Policy Council on Wednesday kept its benchmark rate at
a record low of 1.5%, matching expectations in a Reuters poll.
    In Romania, the finance ministry plans to sell 600 million
lei worth of August 2022 treasury bonds.
    "Today's auction should attract good demand as the tenors
suit a broad range of investors. We expect an average allocation
towards the lower end of the secondary market levels of 3.41%.
Otherwise, the market will likely wait for the outcome of the
European Central Bank meeting today," ING said in a note. 

            CEE         SNAPSHOT   AT  1050                    
            MARKETS               CET                    
                        CURRENCI                               
                        ES                               
                        Latest    Previous     Daily     Change
                        bid       close        change    in
                                                         2019
 Czech                   25.8850      25.8950    +0.04%  -0.69%
 crown                                                   
 Hungary                331.6400     332.7200    +0.33%  -3.18%
 forint                                                  
 Polish                   4.3377       4.3421    +0.10%  -1.11%
 zloty                                                   
 Romanian                 4.7365       4.7358    -0.01%  -1.74%
 leu                                                     
 Croatian                 7.3905       7.3923    +0.02%   +0.26
 kuna                                                         %
 Serbian                117.4200     117.6000    +0.15%   +0.75
 dinar                                                        %
 Note:      calculated from                    1800 CET        
 daily                                                   
 change                                                  
                                                               
                        Latest    Previous     Daily     Change
                                  close        change    in
                                                         2019
 Prague                  1041.72    1043.5700    -0.18%   +5.59
                                                              %
 Budapest               40141.28     40202.61    -0.15%   +2.56
                                                              %
 Warsaw                  2198.64      2189.21    +0.43%  -3.43%
 Bucharest               9239.93      9228.59    +0.12%   +25.1
                                                             4%
 Ljubljana                849.20       849.69    -0.06%   +5.59
                                                              %
 Zagreb                  1879.02      1880.09    -0.06%   +7.45
                                                              %
 Belgrade                 756.65       759.36    -0.36%  -0.66%
 Sofia                    578.91       578.22    +0.12%  -2.62%
                        BONDS                                  
                        Yield     Yield        Spread    Daily
                        (bid)     change       vs Bund   change
                                                         in
 Czech                                                   spread
 Republic                                                
   2-year                 1.1280      -0.0820   +194bps   -8bps
   5-year                 1.0910      -0.0910   +195bps   -8bps
   10-year  <CZ10YT=RR    1.3850       0.0000   +197bps   +2bps
            >                                            
 Poland                                                        
   2-year                 1.5560      -0.0270   +237bps   -3bps
   5-year                 1.8310      -0.0140   +269bps   -1bps
   10-year  <PL10YT=RR    2.0620      -0.0110   +264bps   +1bps
            >                                            
            FORWARD     RATE      AGREEMENT                    
                        3x6       6x9          9x12      3M
                                                         interb
                                                         ank
 Czech Rep          <P      2.10         1.99      1.87    2.14
            RIBOR=>                                      
 Hungary            <B      0.26         0.28      0.32    0.22
            UBOR=>                                       
 Poland             <W      1.74         1.70      1.68    1.72
            IBOR=>                                       
 Note: FRA  are for ask prices                                 
 quotes                                                  
 ******************************************************        
 ********                                                
 

 (Additional reporting by Krisztina Than in Budapest, Jason
Hovet in Prague and Alan Charlish in Warsaw;
Editing by Edmund Blair)
  
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