August 16, 2019 / 9:40 AM / a month ago

CEE MARKETS-Currencies rebound as risk sentiment improves

    By Alan Charlish
    WARSAW, Aug 16 (Reuters) - Central European currencies
gained on Friday, rebounding after China hinted at more support
for its economy and Argentine leaders signalled determination to
control an economic crisis.
    Along with other risk-sensitive emerging-market assets,
central European currencies had been hit by worries over global
trade and the crisis in Argentina. Signs the region's economies
were cooling heightened the pessimism.
    "Sentiment for emerging market currencies improved following
reports suggesting a decrease in political risk in Argentina,"
ING analysts wrote in a note, adding, however, that they
expected the Polish zloty to remain under pressure.
    China's state planner plans to boost disposable income in
2019 and 2020 to spur consumption, while Argentine President
Mauricio Macri announced an end to sales taxes on basic food
products until the end of the year to salvage his re-election
prospects and end an economic crisis.
    As of 0755 GMT, the zloty had gained 0.24% against
the euro to 4.3586. The Hungarian forint rose 0.12% 
to 325.16 and the Czech crown was at 25.832,
strengthening from 2019 low of 25.907 on Thursday.
    Polish, Romanian and Croatian markets were closed on
Thursday for national holidays, meaning markets were illiquid,
which contributed to the zloty's losses in the previous session.
    "Foreign investors often take advantage of such moments of
poor liquidity for aggressive FX speculation," Santander Bank
Polska analysts said in a note.
    In the Czech Republic, producer prices slipped 0.1% in July,
slowing their year-on-year growth to 2.1%, driven mainly by
lower oil prices. The slowdown was more pronounced than the
central bank had assumed in its latest quarterly forecast.
    However, the external environment will keep the central bank
from raising interest rates again this year and possibly
throughout 2020, Radomir Jac, chief economist at Generali
Investments CEE, said in a note.
    Poland's central bank will publish net inflation data at
1200 GMT, with analysts forecasting an acceleration to 2.1%
year-on-year from 1.9% the previous month.
    The region's main stock markets rose in line with their
western European peers, with Prague's PX index up 0.30%
and Warsaw's blue-chip WIG 20 index gaining 0.36%. The
Budapest stock index was up 0.56%.
    Equity markets were helped by positive results overnight by
U.S companies, including chip-gear maker Applied Materials
 and Walmart, which soothed worries about the
slowing global economy. 
    Czech 10-year yields rose 2 basis points to
0.925%, while Polish 10-year yields continued to fall, shedding
2.8 basis points to 1.732%.
    
    
            CEE       SNAPSHO   AT                      
            MARKETS   T        1110              
                               CET               
                      CURRENC                           
                      IES                        
                      Latest   Previou  Daily    Change
                               s                 
                      bid      close    change   in 2019
 Czech      <EURCZK=  25.7800  25.8560   +0.29%   -0.28%
 crown      >                                    
 Hungary    <EURHUF=  324.860  325.490   +0.19%   -1.16%
 forint     >               0        0           
 Polish     <EURPLN=   4.3487   4.3770   +0.65%   -1.36%
 zloty      >                                    
 Romanian   <EURRON=   4.7270   4.7250   -0.04%   -1.54%
 leu        >                                    
 Croatian   <EURHRK=   7.3850   7.3873   +0.03%   +0.34%
 kuna       >                                    
 Serbian    <EURRSD=  117.630  117.770   +0.12%   +0.57%
 dinar      >               0        0           
 Note:      calculated from             1800            
 daily                                  CET      
 change                                          
                                                        
                      Latest   Previou  Daily    Change
                               s                 
                               close    change   in 2019
 Prague               1034.47  1031.03   +0.33%   +4.86%
                                    00           
 Budapest             40207.5  40018.6   +0.47%   +2.73%
                            1        7           
 Warsaw               2079.59  2078.39   +0.06%   -8.65%
 Bucharest            8985.25  9052.10   -0.74%   +21.69
                                                       %
 Ljubljana  <.SBITOP   860.75   862.89   -0.25%   +7.02%
            >                                    
 Zagreb               1888.99  1890.63   -0.09%   +8.02%
 Belgrade   <.BELEX1   745.15   744.58   +0.08%   -2.17%
            5>                                   
 Sofia                 575.15   578.64   -0.60%   -3.25%
                      BONDS                             
                      Yield    Yield    Spread   Daily
                      (bid)    change   vs Bund  change
                                                 in
 Czech                                           spread
 Republic                                        
   2-year   <CZ2YT=R   1.0620   0.0700   +196bp    +6bps
            R>                                s  
   5-year   <CZ5YT=R   0.7250  -0.0060   +164bp    -2bps
            R>                                s  
   10-year  <CZ10YT=   0.9270   0.0220   +163bp    +2bps
            RR>                               s  
 Poland                                                 
   2-year   <PL2YT=R   1.4940  -0.0170   +239bp    -3bps
            R>                                s  
   5-year   <PL5YT=R   1.5850  -0.0430   +250bp    -6bps
            R>                                s  
   10-year  <PL10YT=   1.7370  -0.0230   +244bp    -2bps
            RR>                               s  
            FORWARD   RATE     AGREEME                  
                               NT                
                      3x6      6x9      9x12     3M
                                                 interba
                                                 nk
 Czech Rep               2.02     1.76     1.56     2.14
            <PRIBOR=                             
            >                                    
 Hungary                 0.30     0.29     0.30     0.26
                                                 
 Poland                  1.69     1.62     1.54     1.72
                                                 
 Note: FRA  are for ask                                 
 quotes     prices                               
 **********************************************         
 ****************                                
 

 (Reporting by Alan Charlish in Warsaw, Jan Lopatka in Prague
and Krisztina Than in Budapest; editing by Larry King)
  
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