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CEE MARKETS-Dollar retreat lifts EM currencies, Poland keeps monetary policy loose
October 4, 2017 / 3:22 PM / 2 months ago

CEE MARKETS-Dollar retreat lifts EM currencies, Poland keeps monetary policy loose

    * Dollar retreat boosts CEE currencies
    * Polish central bank plays down inflation risks
    * Czech crown surges, strongest since cap lifted

 (Adds Polish central bank decision and comments and Hungary's
euro bond sale)
    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Oct 4 (Reuters) - Central European
currencies jumped on Wednesday, with the crown hitting its
strongest levels in almost four years, as a retreat of the
dollar triggered flows into emerging markets.
    Expectations that the Czech Central Bank (CNB) will lift
interest rates further also provided support. 
    The CNB, worried by a rebound in inflation, in August became
the first European Union central bank to lift rates since 2012. 
  
    The Polish central bank (NBP) kept rates on hold at its
meeting, playing down inflation risks despite a rise in
September to an annual rate of 2.2 percent.
    NBP Governor Adam Galpinski said inflation could fall to
about 1.5 percent soon, and reiterated that he saw no reason to
change interest rates this year or next.
    The zloty ignored the comments, tracking the euro/dollar.
    In recent weeks, dollar strengthening often led to selling
of the region's currencies, and they firmed on Wednesday as the
dollar eased.
    The zloty traded 0.3 percent firmer at 4.3031
against the euro at 1429 GMT.
    The crown rose 0.2 percent to 25.865 versus the
euro, and was the strongest since the CNB in April removed a cap
which had kept it weaker than 27 for years.
    The forint gained 0.2 percent, trading at 311.8.
    Hungary on Wednesday launched a sale of 10-year bonds worth
1 billion euros ($1.2 bln), to lengthen its euro bond curve by
seven years.
    The sale should fully fund the repurchase of
dollar-denominated bonds worth $1.2 billion.
    The amount of the sale, which was heavily subscribed, and
its final terms at 100 basis points over mid-swaps were in line
with expectations, one Budapest-based fixed income trader said. 
    The leu firmed 0.2 percent to 4.5796 per euro,
touching seven-week highs.
    Apart from the Czechs, Romania's central bank has been the
most worried in the region over a rise in inflation, but the
measures and comments it delivered on Tuesday were mixed.
    It said it would do all that is needed to contain inflation,
but it injected 9.4 billion leu ($2.4 bln) into the interbank
market through a one-week repo tender, and analysts said it may
continue to pump in money to ease a liquidity squeeze.
    The shortage pushed up ROBOR interbank rates in the past
week, prompting criticism of the central bank from Prime
Minister Mihai Tudose. 
    The three-month interbank rate rose to its
highest levels since late 2014, to 1.8 percent. It retreated
only marginally on Wednesday, to 1.79 percent.    
               CEE MARKETS  SNAPSH   AT  1629 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.865  25.925   +0.23   4.42%
                                 0       5       %  
 Hungary                    311.80  312.30   +0.16  -0.96%
 forint                         00      00       %  
 Polish zloty               4.3031  4.3162   +0.30   2.34%
                                                 %  
 Romanian leu               4.5796  4.5880   +0.18  -0.97%
                                                 %  
 Croatian                   7.5002  7.4970  -0.04%   0.73%
 kuna                                               
 Serbian                    119.01  119.23   +0.18   3.65%
 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                     1052.5  1051.2   +0.12   +14.2
                                 1       0       %      0%
 Budapest                   37881.  37908.  -0.07%   +18.3
                                41      57              7%
 Warsaw                     2450.2  2469.5  -0.78%   +25.7
                                 0       1              9%
 Bucharest                  7850.7  7888.0  -0.47%   +10.8
                                 0       1              1%
 Ljubljana                  800.92  800.31   +0.08   +11.6
                                                 %      1%
 Zagreb                     1801.3  1805.2  -0.22%  -9.70%
                                 4       3          
 Belgrade                   720.66  721.10  -0.06%   +0.46
                                                         %
 Sofia                      677.35  680.67  -0.49%   +15.5
                                                        0%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.311   0.057   +102b   +7bps
                                                ps  
   5-year                    0.428     0.1   +072b   +11bp
                                                ps       s
   10-year                   1.338  -0.026   +089b   -1bps
                                                ps  
 Poland                                                   
   2-year                    1.727  -0.004   +244b   +1bps
                                                ps  
   5-year                      2.7   0.003   +299b   +2bps
                                                ps  
   10-year                   3.386   0.012   +294b   +3bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.73    0.86    0.99       0
               IBOR=>                               
 Hungary               <BU    0.07    0.11    0.14    0.03
               BOR=>                                
 Poland                <WI   1.769   1.815    1.87    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 

($1 = 0.8507 euros)

($1 = 3.8916 lei)

 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Raissa Kasolowsky and Susan Fenton)
  
 
 

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