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CEE MARKETS-Currencies strengthen on record Czech GDP growth, PMIs
September 1, 2017 / 9:17 AM / 3 months ago

CEE MARKETS-Currencies strengthen on record Czech GDP growth, PMIs

    * Czechs report record Q2 GDP growth at 2.5 pct q/q
    * Czech, Hungarian, Polish PMIs show continuing growth
    * Crown strengthens near recent multi-week highs vs euro
    * Czech central bank may raise rates again soon

 (Adds stock market, Czech central bank comments)
    By Sandor Peto
    BUDAPEST, Sept 1 (Reuters) - Central European currencies
mostly firmed on Friday, helped by  data showing record
quarterly growth in the Czech economy and upbeat manufacturing
business sentiment figures across the region.
    Stocks were mixed. Budapest's main index continued to
drift off record highs. Bucharest regained some ground
after slumping on Thursday on changes in corporate tax rules
that were unfavourable to banks.
    The Czechs revised annual second-quarter economic growth to
4.7 percent from 4.5 percent, and quarterly growth to 2.5
percent from 2.3 percent, the fastest three-month pace on
record.
    The Czech August Purchasing Managers' Index (PMI) dropped to
54.9, below analysts' forecast of 56, from 55.3 in July.
 It was still well above the 50 mark that separates
economic contraction from expansion, as were similar data
readings in Budapest and Warsaw.
    The crown gained 0.1 percent against the euro by
1241 GMT, to trade at 26.081, still below the two-week highs it
set on Wednesday at 26.02 after hawkish comments from two Czech
central bankers.
    The comments triggered some expectations that the bank (CNB)
may lift interest rates further already at its next meeting on
Sept. 27, after early last month it delivered the European
Union's first rate hike since 2012 to fight inflation, which
after years of anaemic levels rose above its 2 percent target. 
    Growth picked up in the second quarter "to a substantially
greater extent than forecast by the CNB," the bank said.

    KBC analysts said the CNB was still more likely to wait for
new economic projections from its staff due in November.
    "Nevertheless, a September rate hike can hardly be excluded.
We should add that neither September (27th) nor November (2nd)
rate hikes are fully priced in the money market rates now," they
said in a note.
    Polish August flash figures released on Thursday showed a
modest rise in annual inflation to 1.8 percent, as expected and
still below the Polish central bank's 2.5 percent target.

    According to the unanimous view of 18 analysts in a Reuters
poll, the central bank in Warsaw is expected to keep its
benchmark rate at a record low at its meeting next Wednesday.
It is also expected to hold fire until hiking in the last
quarter of 2018.
    Hungary's central bank flagged more monetary easing a week
ago, knocking down the forint from 28-month highs to
around 306 against the euro.
    It still traded near that level on Friday, though the strong
economic figures lifted it and the zloty by 0.1
percent, to 305.15 and 4.246, respectively.
    
               CEE MARKETS  SNAPSH   AT  1441 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.081  26.112   +0.12   3.55%
                                 0       5       %  
 Hungary                    304.80  305.56   +0.25   1.32%
 forint                         00      00       %  
 Polish zloty               4.2382  4.2516   +0.31   3.91%
                                                 %  
 Romanian leu               4.5975  4.5937  -0.08%  -1.36%
 Croatian                   7.4210  7.4155  -0.07%   1.81%
 kuna                                               
 Serbian                    119.15  119.22   +0.06   3.52%
 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                     1027.6  1022.2   +0.53   +11.5
                                 4       7       %      0%
 Budapest                   37803.  38092.  -0.76%   +18.1
                                29      26              2%
 Warsaw                     2518.2  2516.2   +0.08   +29.2
                                 9       6       %      8%
 Bucharest                  8135.9  8052.0   +1.04   +14.8
                                 8       3       %      3%
 Ljubljana                  814.51  812.75   +0.22   +13.5
                                                 %      1%
 Zagreb                     1896.6  1893.0   +0.19  -4.92%
                                 4       1       %  
 Belgrade                   724.71  725.60  -0.12%   +1.02
                                                         %
 Sofia                      708.02  705.44   +0.37   +20.7
                                                 %      3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.048   0.005   +068b   +0bps
                                                ps  
   5-year                    0.038   0.024   +038b   +2bps
                                                ps  
   10-year                    0.88  -0.037   +050b   -5bps
                                                ps  
 Poland                                                   
   2-year                    1.715   0.012   +245b   +1bps
                                                ps  
   5-year                    2.628   0.011   +297b   +1bps
                                                ps  
   10-year                   3.302   0.015   +293b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.65    0.78    0.88       0
               IBOR=>                               
 Hungary               <BU    0.21    0.25    0.31    0.15
               BOR=>                                
 Poland                <WI   1.766   1.775   1.825    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
    

 (Reporting by Sandor Peto; editing by John Stonestreet)
  
 
 

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