October 24, 2017 / 2:50 PM / a month ago

CEE MARKETS-Central bank comments boost Czech crown, hit forint

    * Crown hits 4-year high on central banker Nidetzky comments
    * Nidetzky says Czech bank may discuss 50 bp hike in Nov
    * Hungarian central bank does not cut rates further
    * Forint, zloty down on caution ahead of ECB meeting

 (Recasts, adding Czech rate setter comments, Hungarian central
bank decision)
    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Oct 24 (Reuters) - Hawkish comments from
the Czech central bank (CNB) boosted the crown to a four-year
high, while dovish remarks from the National Bank of Hungary
knocked the forint to a two-week low on Tuesday.
    The CNB may consider a 50 basis points hike, which would
triple its main rate, at its meeting on Nov. 2, board member
Tomas Nidetzky told Reuters.
    The crown breached the 25.6 line against the euro.
Trading at 25.58 at 1311 GMT, it was firmer by 0.3 percent,
while the forint and the zloty weakened by
half a percent.
    Czech markets set aside any immediate concern that
billionaire Andrej Babis' ANO party, which won last weekend's
election, may run into trouble in its search for coalition
partners..
    Nidetzky's comments boosted expectations, which have lifted
the crown by two percent since July, that the CNB would fight a
rise in inflation by increasing rates further, after a hike in
early August.
    The crown has not firmed enough to prevent more hikes,
Nidetzky said.
    "(The firming) is a slow reaction as markets might think 50
basis points is still less likely," a dealer said, adding that
the debate was no more about whether a rate hike would happen,
but by how much.
    Most regional currencies have been buoyed by robust economic
figures in the past months.
    But concerns have grown ahead of Thursday's European Central
Bank meeting that the world's big central banks may shift
towards more hawkish policies. 
    "The ECB comments may not prove positive to emerging market
currencies," one Budapest-based dealer said.
    Hungary's central bank kept rates on hold as expected on
Tuesday, but its dovish comments deepened the forint's losses.
    It said that it was examining unconventional tools to ease
policy further, after a cut in its overnight deposit rate last
month and liquidity injections to the market through its fx swap
tenders. It said the ECB is expected to retain loose monetary
conditions.
    Others, like PKO BP strategist Jaroslaw Kosaty were less
optimistic over the international sentiment.
    "The zloty should remain under the influence of global
factors, which are unfavourable," he said.
    Poland's central bank, which will publish the minutes of its
latest meeting on Thursday, has remained relatively dovish
despite a rise in inflation.
    But forward rate agreements (FRAs) have priced in a rate
hike to come earlier than most analysts projected in a Reuters
poll four weeks ago.   
    The FRAs see 26-basis points of monetary tightening over the
next 12 months, the biggest scale priced in since February.
    For a recent analysis on monetary policy in Central Europe,
click on:   
               CEE MARKETS  SNAPSH   AT  1511 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.580  25.646   +0.26   5.58%
                                 0       0       %  
 Hungary                    309.50  308.02  -0.48%  -0.22%
 forint                         00      00          
 Polish zloty               4.2421  4.2231  -0.45%   3.81%
 Romanian leu               4.6027  4.5967  -0.13%  -1.47%
 Croatian                   7.5100  7.5065  -0.05%   0.60%
 kuna                                               
 Serbian                    119.50  119.27  -0.19%   3.22%
 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                     1051.7  1048.2   +0.34   +14.1
                                 9       5       %      3%
 Budapest                   39229.  39132.   +0.25   +22.5
                                60      62       %      8%
 Warsaw                     2456.6  2473.4  -0.68%   +26.1
                                 8       2              2%
 Bucharest                  7873.2  7900.5  -0.35%   +11.1
                                 4       8              2%
 Ljubljana                  803.99  803.93   +0.01   +12.0
                                                 %      4%
 Zagreb                     1858.0  1849.4   +0.47  -6.86%
                                 4       4       %  
 Belgrade                   727.18  728.25  -0.15%   +1.37
                                                         %
 Sofia                      655.87  667.48  -1.74%   +11.8
                                                        4%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.391   0.164   +109b   +14bp
                                                ps       s
   5-year                    0.831   0.085   +109b   +6bps
                                                ps  
   10-year                   1.667  -0.015   +120b   -5bps
                                                ps  
 Poland                                                   
   2-year                      1.7   0.016   +240b   -1bps
                                                ps  
   5-year                    2.684   0.005   +294b   -2bps
                                                ps  
   10-year                   3.389   0.014   +292b   -2bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.88    0.98    1.18       0
               IBOR=>                               
 Hungary               <BU    0.08     0.1    0.14    0.03
               BOR=>                                
 Poland                <WI   1.773   1.835  1.9175    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
    

 (Additional reporting by Radu Marinas in Bucharest, Jason Hovet
in Prague and Marcin Goettig in Warsaw, Editing by Jeremy Gaunt
and Pritha Sarkar)
  
 
 

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