July 24, 2019 / 8:13 AM / a month ago

CEE MARKETS-Currencies steady as Central Europe's central banks in wait-and-see mode

    By Krisztina  Than
    BUDAPEST, July 24 (Reuters) - Central Europe's currencies
were little changed in slow trade early on Wednesday, with the
forint also hovering around its Tuesday levels after the
Hungarian central bank maintained its dovish stance at its
rate-setting meeting.
    With the European Central Bank and the U.S. Federal Reserve
both having flagged monetary easing, the region's main central
banks have adopted a wait-and-see attitude to policy. 
    At 0730 GMT, the forint was flat at 325.80 to the
euro, firmer than last week's low of 326.83. Poland's zloty
, Romania's leu and the Czech crown
were unchanged.
    While global monetary policy remains loose, there is no
pressure on rate-setters in the region to act and they can
continue to support their fast-growing economies.
    The ECB meets on Thursday, and investors are waiting for
signals on how fast its policymakers will ease conditions to
help the euro zone economy. 
    The National Bank of Hungary left its interest rates
unchanged on Tuesday as expected, and affirmed its accommodative
stance, saying data since its June policy meeting confirmed its
view that inflation will decline from the end of this year.

    "In our view, the recent turn with regard to the future
direction of monetary policies in developed markets ... has
opened a wide room of manoeuvre for the NBH allowing it not to
tighten its policy in any meaningful way," Erste Bank analysts
said in a note after the rate decision.
    The Czech Republic will hold a government bond auction later
on Tuesday which is expected to attract sufficient demand,
traders said.
    "We expect demand to be strongish today, as was the case in
the past few auctions," Komercni Banka said in a note. 
    "The bid/cover ratios are unlikely to be extreme anymore
with the nominal yields very low but still will generate
sufficient demand for the auction to be called strong." 
    The Czech central bank has also paused on rate tightening
following eight increases in the last two years, ad given
guidance for stability ahead. The bank releases an update on its
economic outlook on Aug. 1.
    Poland's main rate remains at 1.5%, and analysts expect
there will be no appetite among policymakers to change it any
time soon.
    Stock markets were mixed, with marginal moves in early
trade. Budapest was up 0.3 %, Prague traded 0.2%
higher, and Warsaw was 0.2% lower.
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        0930              
                            Latest   Previou  Daily    Change
                            bid      close    change   in 2019
 EURCZK  Czech     <EURCZK  25.5550  25.5480   -0.03%   +0.59%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  325.800  325.840   +0.01%   -1.45%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.2565   4.2578   +0.03%   +0.78%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.7205   4.7207   +0.00%   -1.41%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.3845   7.3840   -0.01%   +0.35%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.810  117.830   +0.02%   +0.42%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
                            Latest   Previou  Daily    Change
                                     close    change   in 2019
 .PX     Prague             1072.99  1071.22   +0.17%   +8.76%
 .BUX    Budapest           41485.0  41367.2   +0.28%   +5.99%
                                  2        2           
 .WIG20  Warsaw    <.WIG20  2330.60  2335.86   -0.23%   +2.37%
 .BETI   Buchares           9029.80  9065.40   -0.39%   +22.29
         t                                                   %
 .SBITO  Ljubljan  <.SBITO   869.99   868.50   +0.17%   +8.17%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1912.55  1912.15   +0.02%   +9.36%
 .BELEX  Belgrade  <.BELEX   746.49   746.99   -0.07%   -2.00%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   579.08   579.15   -0.01%   -2.59%
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
         Czech                                         spread
 CZ2YT=    2-year  <CZ2YT=   1.3680   0.0020   +217bp    +2bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.1970   0.0030   +193bp    +2bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.3910   0.0040   +176bp    +1bps
 =RR     10-year   =RR>                             s  
 PL2YT=    2-year  <PL2YT=   1.5700  -0.0110   +237bp    +1bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.7700  -0.1070   +250bp    -9bps
 RR                RR>                              s  
 PL10YT            <PL10YT   2.1120  -0.0030   +248bp    +1bps
 =RR     10-year   =RR>                             s  
                   FORWARD  RATE     AGREEME                  
                            3x6      6x9      9x12     3M
         Czech     <CZKFRA     2.15     2.05     1.97     2.16
         Rep       ><PRIBO                             
         Hungary   <HUFFRA     0.32     0.38     0.43     0.26
         Poland    <PLNFRA     1.73     1.71     1.69     1.72
         Note:     are for ask                                
         FRA       prices                              


 (Reporting by Krisztina Than, additional reporting by Jason
Hovet in Prague; Editing by Catherine Evans)
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