November 14, 2017 / 10:15 AM / 10 days ago

CEE MARKETS-Currencies firm on robust Q3 GDP, labour shortage a key risk

    * Romania Q3 GDP leads with 8.8 pct annual growth
    * Currencies mostly rise, labour shortage forms growth
bottleneck
    * Budapest leads equities gains

    By Sandor Peto and Radu-Sorin Marinas
    BUDAPEST/BUCHAREST, Nov 14 (Reuters) - Central European
currencies and equities rose on Tuesday after robust
third-quarter economic output figures from the region, led by
the 8.8 percent annual growth rate in Romania.
    Romania's expansion, which exceeded all analyst forecasts,
picked up from 6.1 percent in the second quarter. Czech growth
accelerated to 5 percent from 4.7 percent, Poland's to 4.7
percent from 4 percent, and Hungary's to 3.6 percent from 3.3
percent.
    The leu and the forint gained 0.1
percent against the euro by 0918 GMT. The zloty rose
0.2 percent.
    Romania's leu, trading at 4.648, was still off Monday's
record lows of 4.657. It weakened through the 4.6 line after the
Romanian central bank said last week that it would focus on
keeping market interest rates close to its benchmark rate and
loosen its grip on the currency.
    A jump in inflation could lead to interest rate increases
next year, fiscal stimulus would also need to be cut back, and
the scarcity of labour resources will lead to a slowdown in
growth, said ING analyst Ciprian Dascalu.
    But this year's higher output will make Romania's budget and
current account deficits and public debt look better.
    "It looks that some worries could be offset by the economy
growing its way out of troubles," Dascalu said.
    Slower-growing Hungary has not faced overheating concerns,
and the Hungarian central bank may ease policy further at its
meeting next week, dealers said.
    "It may introduce long-term FX swaps," one dealer said.
    A labour shortage may limit Hungary's growth, therefore
"fast wage dynamics could remain, which could increase
consumption, and firms will be forced to invest in technology
and machinery," Takarekbank analyst Gergely Suppan said.
    The crown of the Czech Republic, which has the
tightest labour market in the EU, eased a tad after the data.
    Trading at 25.565 against the euro, it remained near
four-year highs, and expectations the Czech central bank will
raise interest rates may strengthen it further in coming months.
. 
    In equities markets, Budapest led gains, with its main index
 rising 0.85 percent. Government bonds changed little in
the region.
    
               CEE MARKETS  SNAPSH   AT  1018 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.565  25.552  -0.05%   5.64%
                                 0       5          
 Hungary                    311.75  311.93   +0.06  -0.94%
 forint                         00      00       %  
 Polish zloty               4.2300  4.2376   +0.18   4.11%
                                                 %  
 Romanian leu               4.6489  4.6529   +0.09  -2.45%
                                                 %  
 Croatian                   7.5480  7.5495   +0.02   0.09%
 kuna                                            %  
 Serbian                    118.41  118.56   +0.13   4.17%
 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                     1063.3  1062.5   +0.07   +15.3
                                 3       6       %      8%
 Budapest                   39588.  39254.   +0.85   +23.7
                                67      00       %      0%
 Warsaw                     2464.9  2454.6   +0.42   +26.5
                                 5       0       %      4%
 Bucharest                  7776.7  7738.6   +0.49   +9.76
                                 6       6       %       %
 Ljubljana                  789.48  787.92   +0.20   +10.0
                                                 %      2%
 Zagreb                     1842.1  1842.0   +0.01  -7.65%
                                 9       4       %  
 Belgrade                   735.90  736.12  -0.03%   +2.58
                                                         %
 Sofia                      670.18  669.22   +0.14   +14.2
                                                 %      8%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.479   0.135   +122b   +13bp
                                                ps       s
   5-year                    0.776       0   +109b   -1bps
                                                ps  
   10-year                   1.749  -0.028   +133b   -3bps
                                                ps  
 Poland                                                   
   2-year                    1.613  -0.002   +235b   -1bps
                                                ps  
   5-year                     2.63   0.014   +295b   +1bps
                                                ps  
   10-year                   3.453   0.019   +303b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.97    1.13    1.24       0
               IBOR=>                               
 Hungary               <BU    0.08    0.09    0.15    0.03
               BOR=>                                
 Poland                <WI    1.77  1.8175   1.915    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Sandor Peto, editing by Larry King)
  
 
 

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