September 26, 2019 / 9:27 AM / in a month

CEE MARKETS-Currencies gain; crown supported by hawkish central bank

    By Krisztina  Than
    BUDAPEST, Sept 26 (Reuters) - Central European currencies
gained Thursday as global sentiment improved, with the Czech
crown supported by a hawkish central bank message on Wednesday
that revived expectations interest rates would rise. 
    The crown touched a five-and-a-half week high in
early trading and was 0.1% higher at 0811 GMT. 
    The Czech central bank voted 5-2 to leave its two-week repo
rate at 2.00%, with dissenters backing a 25-basis-
point increase. Governor Jiri Rusnok said the board was likely
to return to the debate at its next meeting, in November.

    "The press conference (was) very hawkish – 2 votes for a
hike. Not that shocking, probably, but the governor was saying
that the debate about a hike was very balanced as inflationary
risks to forecast seem to be prevailing," said Dalimil
Vyskovsky, head of fixed income at Komercni Banka.
    Czech rate markets moved up 8 to 10 basis points.
    "Still, we have one rate cut priced in, in the 1Y horizon,
which might prove too much," Vyskovsky said, adding that "odds
for a hike in November have risen considerably."
    The Hungarian forint gained in early trade, then fell to
334.40 by 0834 GMT. 
    The Hungarian central bank projected lower inflation and an
economic slowdown and shifted to a more dovish stance on
Tuesday, when it left its interest rates at the lowest in
Central Europe.
    The forint slumped to a record low of 336.10 to
the euro on Tuesday before the central bank meeting.
    On Thursday the bank released details of its quarterly
inflation report, trimming its tax-adjusted core inflation
forecasts and saying the country's current account had swung
into a deficit in 2018 and would remain in a deficit at least
until 2021, based on its current assumptions.
    "I think in the morning currencies firmed probably on the
... more positive news regarding the US-China trade war. This is
what we can expect now: a bit of firming, and then buyers
stepping in and the forint easing again," a dealer said in
Budapest. 
    She said the forint could trade between 333 and 336 in the
next few days, then weaken past 336 and ease further.
    Stock markets across the region rose. Prague, Warsaw
 and Budapest were all trading about 0.4% higher
amid cautious optimism over conciliatory comments on trade from
China's commerce ministry.   
                     CEE    SNAPSHOT     AT                      
                     MARKE              1011 CET          
                     TS                                   
                            CURRENCIES                           
                            Latest      Previous  Daily   Change
                            bid         close     change  in 2019
 EURCZK=  Czech      <EURC     25.7610   25.7775   +0.06   -0.21%
          crown      ZK=>                              %  
 EURHUF=  Hungary    <EURH    333.9000  334.3800   +0.14   -3.84%
          forint     UF=>                              %  
 EURPLN=  Polish     <EURP      4.3770    4.3822   +0.12   -2.00%
          zloty      LN=>                              %  
 EURRON=  Romanian   <EURR      4.7460    4.7473   +0.03   -1.94%
          leu        ON=>                              %  
 EURHRK=  Croatian   <EURH      7.4050    7.4053   +0.00   +0.07%
          kuna       RK=>                              %  
 EURRSD=  Serbian    <EURR    117.3900  117.5200   +0.11   +0.78%
          dinar      SD=>                              %  
          Note:      calculated from              1800           
          daily                                   CET     
          change                                          
                                                                 
                            Latest      Previous  Daily   Change
                                        close     change  in 2019
 .PX      Prague               1035.75  1031.060   +0.45   +4.99%
                                               0       %  
 .BUX     Budapest   <.BUX    40712.44  40553.92   +0.39   +4.02%
                     >                                 %  
 .WIG20   Warsaw     <.WIG     2167.37   2159.68   +0.36   -4.80%
                     20>                               %  
 .BETI    Bucharest  <.BET     9517.54   9502.48   +0.16   +28.90
                     I>                                %        %
 .SBITOP  Ljubljana  <.SBI      854.46    857.05  -0.30%   +6.24%
                     TOP>                                 
 .CRBEX   Zagreb     <.CRB     1939.58   1934.67   +0.25   +10.91
                     EX>                               %        %
 .BELEX1  Belgrade   <.BEL      753.50    753.22   +0.04   -1.08%
 5                   EX15>                             %  
 .SOFIX   Sofia      <.SOF      570.26    573.64  -0.59%   -4.07%
                     IX>                                  
                            BONDS                                
                            Yield       Yield     Spread  Daily
                            (bid)       change    vs      change
                                                  Bund    in
          Czech                                           spread
          Republic                                        
 CZ2YT=R    2-year   <CZ2Y      1.3320    0.0140   +206b    +2bps
 R                   T=RR>                            ps  
 CZ5YT=R    5-year   <CZ5Y      1.0910   -0.0080   +188b    +0bps
 R                   T=RR>                            ps  
 CZ10YT=    10-year  <CZ10      1.3270    0.0060   +191b    +0bps
 RR                  YT=RR                            ps  
                     >                                    
          Poland                                                 
 PL2YT=R    2-year   <PL2Y      1.4800   -0.0080   +221b    +0bps
 R                   T=RR>                            ps  
 PL5YT=R    5-year   <PL5Y      1.8040   -0.0040   +259b    +1bps
 R                   T=RR>                            ps  
 PL10YT=    10-year  <PL10      2.0270   -0.0130   +261b    -2bps
 RR                  YT=RR                            ps  
                     >                                    
                     FORWA  RATE        AGREEMEN                 
                     RD                 T                 
                            3x6         6x9       9x12    3M
                                                          interba
                                                          nk
          Czech Rep  <CZKF        2.16      2.09    2.10     2.14
                     RA><P                                
                     RIBOR                                
                     =>                                   
          Hungary    <HUFF        0.26      0.29    0.32     0.21
                     RA><B                                
                     UBOR=                                
                     >                                    
          Poland     <PLNF        1.73      1.68    1.65     1.72
                     RA><W                                
                     IBOR=                                
                     >                                    
          Note: FRA  are for ask                                 
          quotes     prices                               
 

 (Additional reporting by Jason Hovet and Robert Muller in
Prague, Editing by)
  
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