September 6, 2018 / 2:43 PM / 8 months ago

CEE MARKETS-Currencies rebound as dollar dips, Polish bonds ease

    * Currencies mostly rebound as dollar sags
    * Analyst poll sees recovery in crown, forint, zloty 
    * Serbian central bank keeps rates on hold as expected

 (Adds bond markets, Reuters fx poll, Serbian central bank
    By Sandor Peto and Aleksandar Vasovic
    BUDAPEST/BELGRADE, Sept 6 (Reuters) - Central European
currencies and stocks mostly rebounded on Thursday as the dollar
weakened, with the forint lifting off the two-month
lows it hit this week.
    After hitting 329 versus the euro on Wednesday, it was
trading up 0.4 percent at 326.75 at 1326 GMT, outperforming the
Czech crown despite Czech industrial output jumping
10.3 percent year on year in July, while Hungary's 6.2 percent
rise was below forecasts. 
    And the zloty rose 0.3 percent even though the
Polish central bank said on Wednesday that interest rates could
stay at record lows until beyond the end of 2019.
    The Polish government bond yield curve steepened, with the
10-year yield bid higher by 6 basis points at 3.295
percent. The bond hit its highest yield level in two months.
    Hungary, whose central bank is also expected to reaffirm its
loose policy stance at its meeting on Sept. 18, has already seen
a surge in yields earlier this year. Its 10-year yield was fixed
flat at 3.56 percent.
    The yield on corresponding Czech bonds ticked up
by 2 basis points to 2.125 percent, supported by short supply
after the government cancelled an auction of 2029-expiry bonds. 
    Societe Generale said in a note that emerging market
currencies could weaken further in the next year, and Central
European 10-year bond yields could see the biggest increase
apart from Brazil.
    "Contagion (in emerging markets) via sentiment and portfolio
de-risking is more likely than direct macro/financial
spill-overs," the note said.
    Views are split over the near-term outlook of the region's
assets. Raiffeisen analysts said in a note regional currencies
could recover, providing support to Polish government bonds.
    A Reuters poll of analysts reflected expectations that
pressure on the region's main currencies from the dollar's
strength and jitters in other emerging markets including Turkey
could ease already in the short-term.
    The survey predicted a firming of about one percent in the
forint and the zloty against the euro by the end of the month
relative to Wednesday's closing levels.
    Over the coming year, the prospect of tighter monetary
policy in the euro zone could help the forint gain 2.9 percent,
the zloty 2.3 percent and the crown 2.6 percent, according to
the poll.  
    Serbia's central bank kept the region's highest benchmark
rate on hold at 3 percent at its meeting on Thursday.

    The dinar eased slightly.    
            CEE       SNAPSHOT   AT                         
            MARKETS             1534 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.7100   25.7600    +0.19%    -0.65%
 crown      >                                       
 Hungary    <EURHUF=  326.7500  328.2000    +0.44%    -4.85%
 forint     >                                       
 Polish     <EURPLN=    4.3206    4.3330    +0.29%    -3.34%
 zloty      >                                       
 Romanian   <EURRON=    4.6380    4.6360    -0.04%    +0.90%
 leu        >                                       
 Croatian   <EURHRK=    7.4340    7.4310    -0.04%    -0.05%
 kuna       >                                       
 Serbian    <EURRSD=  118.3000  118.1000    -0.17%    +0.17%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1061.25  1065.040    -0.36%    -1.57%
 Budapest             37202.94  37135.33    +0.18%    -5.52%
 Warsaw                2299.43   2295.51    +0.17%    -6.57%
 Bucharest             8345.89   8313.26    +0.39%    +7.64%
 Ljubljana  <.SBITOP    857.87    856.77    +0.13%    +6.39%
 Zagreb                1808.07   1817.70    -0.53%    -1.89%
 Belgrade   <.BELEX1    724.71    725.82    -0.15%    -4.62%
 Sofia                  628.11    628.11    +0.00%    -7.28%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.4370    0.1080   +201bps    +12bps
   5-year   <CZ5YT=R    1.7420    0.0280   +197bps     +3bps
   10-year  <CZ10YT=    2.1250    0.0180   +175bps     +2bps
   2-year   <PL2YT=R    1.6370    0.0230   +221bps     +3bps
   5-year   <PL5YT=R    2.6070    0.0300   +284bps     +3bps
   10-year  <PL10YT=    3.2950    0.0570   +292bps     +6bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                1.88      2.01      2.12      1.51
 Hungary                  0.62      0.85      1.05      0.20
 Poland                   1.77      1.80      1.84      1.71
 Note: FRA  are for ask prices                              
 (Reporting by Sandor Peto; Editing by Catherine Evans and
Alexander Smith)
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