January 8, 2019 / 11:00 AM / 6 months ago

CEE MARKETS-Currencies ease, central banks seen holding fire

    * Romanian, Polish central banks seen keeping rates
unchanged
    * Political pressure on Polish central bank chief weighs on
zloty
    * Czech, Hungarian industrial output figures show slowdown

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, Jan 8 (Reuters) - Central European
currencies weakened on Tuesday before central bank meetings that
are unlikely to raise interest rates and after Czech and
Hungarian industrial output data showed slowing growth.
    Romania's central bank, sitting on Tuesday, is expected to
keep its 2.5 percent benchmark rate on hold. So is the Polish
central bank, which meets on Wednesday.
    Monday for Polish zloty was hit by political pressure on
Polish central bank Governor Adam Glapinski over the pay of one
of his main aides.  The tension follows a corruption scandal
last year that forced the head of financial market regulation, a
protege of Glapinski, out of his job in November.
    "Under the circumstances, it is not surprising that the risk
premium on the zloty should rise," Commerzbank analysts said in
a note. 
    The zloty eased 0.1 percent versus the euro to 4.3 by 0929
GMT, in line with the forint and the leu.
    The Czech crown, buoyed recently by expectations
for the Czech central bank would continue to raise interest
rates, shed a quarter of a percent, to trade at 25.636, still
near three-and-a-half-month highs.
    According to data released on Tuesday, Czech and Hungarian
industrial output growth slowed in November, reflecting an
unexpected fall in output in Germany, the region's biggest
export market.
    Central European government bond yields continued to edge
higher after falling last month, tracking German equivalents.
    Romania's 10-year yield was bid higher by 3 basis points at
4.64 percent. The Romanian central bank is widely expected to
keep interest rates on hold on Tuesday.
    A package of tax increases begun in December to address
budget problems continues to weigh on sentiment. Comments of
central bank Governor Mugur Isarescu on the measures at the
bank's news conference will be closely watched.
    His comments on commercial banks' minimum reserve
requirements will be also scrutinized. He had earlier suggested
that a cut was likely should a liquidity shortage in leu markets
become a fixture, ING analyst Ciprian Dascalu said in a note.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1029 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6360   25.5750    -0.24%    +0.28%
 crown      >                                       
 Hungary    <EURHUF=  321.4000  321.2000    -0.06%    -0.10%
 forint     >                                       
 Polish     <EURPLN=    4.3000    4.2960    -0.09%    -0.24%
 zloty      >                                       
 Romanian   <EURRON=    4.6640    4.6600    -0.09%    -0.21%
 leu        >                                       
 Croatian   <EURHRK=    7.4260    7.4255    -0.01%    -0.22%
 kuna       >                                       
 Serbian    <EURRSD=  118.2300  118.3500    +0.10%    +0.06%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1009.06  1008.560    +0.05%    +2.28%
                                       0            
 Budapest             40535.42  40569.47    -0.08%    +3.57%
 Warsaw                2322.17   2331.45    -0.40%    +2.00%
 Bucharest             7697.94   7683.07    +0.19%    +4.26%
 Ljubljana  <.SBITOP    803.54    802.32    +0.15%    -0.09%
            >                                       
 Zagreb                1737.93   1726.78    +0.65%    -0.62%
 Belgrade   <.BELEX1    727.65    731.79    -0.57%    -4.47%
            5>                                      
 Sofia                  574.57    577.15    -0.45%    -3.35%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8460    0.2170   +242bps    +20bps
            R>                                      
   5-year   <CZ5YT=R    1.7900    0.0580   +207bps     +4bps
            R>                                      
   10-year  <CZ10YT=    1.8380    0.0530   +160bps     +3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.4730   -0.0070   +205bps     -2bps
            R>                                      
   5-year   <PL5YT=R    2.3050    0.0230   +258bps     +0bps
            R>                                      
   10-year  <PL10YT=    2.8410    0.0470   +260bps     +2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.09      2.19      2.21      2.01
            <PRIBOR=                                
            >                                       
 Hungary                  0.31      0.55      0.80      0.13
                                                    
 Poland                   1.74      1.75      1.77      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Reporting by Sandor Peto, editing by Larry King)
  
 
 
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