November 27, 2018 / 10:50 AM / 6 months ago

CEE MARKETS-Forint, crown ease on rising dollar, Ukraine tension

    * Forint hits 4-week low due to dollar rise, in slow trade
    * Ukraine-Russia conflict, sentiment data weigh on crown
    * Poland detains former regulator head, but banks stocks

    By Sandor Peto and Robert Muller
    BUDAPEST/PRAGUE, Nov 27 (Reuters) - The forint eased to a
four-week low against the euro on Tuesday as a firming dollar
 and tension in the neighbouring region between Kiev and
Moscow cut appetite for Central European currencies.
    The forint and the Czech crown eased 0.2
percent versus the euro by 0954 GMT, to 324.15 and 25.95
    "This is sentiment-driven, as the dollar has firmed... while
 I would call this healthy range-trading, with the forint
drifting towards the (past few months') bottom around 325," one
Budapest-based currency dealer said.
    The dealer said lower market turnover made the forint and
the crown more vulnerable to international trends than the zloty
, which firmed 0.1 percent to 4.2917 against the euro.
    The week-end's naval conflict between Russia and Ukraine and
Monday's weak Czech consumer sentiment data for November weighed
on sentiment in the crown's market, Komercni Banka analysts said
in a note.
    The Czech central bank, which increased interest rates at
each of its last four rate meetings, is not expected to hike
them further at its meeting on December 20.
    "We don't expect the crown to strengthen in the remainder of
the year, that should come only in 2019," Komercni said.
    Investors continue to watch how Rome's tension with the
European Union over Italy's 2019 budget deficit target affects
the euro, the currency dealer said.  
    "The forint's recent strength, as it approached its 200-day
moving average, has been more surprising than its current
retreat," said Orsolya Nyeste, analyst of Erste Group in
    Continuing robust consumption has led to some decline in
Hungary's trade surpluses in the past months, she said.
    On a positive note, a retreat in crude prices has soothed
fears that inflation might reach the top of the central bank's
2-4 percent target range without the bank changing its loose
policy stance, Nyeste added.
    A pick-up in the inflow of European Union funds has kept
local markets awash in money, fuelling an appetite for Hungarian
government bonds, market participants said.
    Hungarian bonds took a breather after a rally in prices in
the past seven weeks which has brought down yields by around 60
basis points to multi-month lows.
    Regional stocks were rangebound, mostly slightly firmer from
Monday, including the index of Warsaw-listed banks,
which rose half a percent.
    Poland's anti-corruption agency detained the former head of
financial regulator KNF, Marek Chrzanowski, over a corruption
scandal which earlier this month knocked down Polish bank
            CEE       SNAPSHOT   AT                         
            MARKETS             1054 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.9500   25.9070    -0.17%    -1.57%
 crown      >                                       
 Hungary    <EURHUF=  324.1500  323.4800    -0.21%    -4.08%
 forint     >                                       
 Polish     <EURPLN=    4.2917    4.2962    +0.10%    -2.69%
 zloty      >                                       
 Romanian   <EURRON=    4.6605    4.6600    -0.01%    +0.41%
 leu        >                                       
 Croatian   <EURHRK=    7.4280    7.4275    -0.01%    +0.03%
 kuna       >                                       
 Serbian    <EURRSD=  118.3200  118.3600    +0.03%    +0.15%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1065.52  1065.160    +0.03%    -1.17%
 Budapest             39531.42  39598.29    -0.17%    +0.39%
 Warsaw                2223.47   2213.57    +0.45%    -9.66%
 Bucharest             8526.83   8515.53    +0.13%    +9.97%
 Ljubljana  <.SBITOP    819.64    818.39    +0.15%    +1.64%
 Zagreb                1729.22   1736.35    -0.41%    -6.17%
 Belgrade   <.BELEX1    748.96    749.38    -0.06%    -1.43%
 Sofia                  584.99    584.90    +0.02%   -13.65%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.7400    0.0970   +238bps    +10bps
   5-year   <CZ5YT=R    1.8400   -0.0040   +207bps     +1bps
   10-year  <CZ10YT=    2.0930    0.0080   +174bps     +2bps
   2-year   <PL2YT=R    1.5880   -0.0050   +223bps     +0bps
   5-year   <PL5YT=R    2.4460    0.0050   +268bps     +2bps
   10-year  <PL10YT=    3.1880    0.0080   +284bps     +2bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.18      2.28      2.35      2.02
 Hungary                  0.30      0.50      0.80      0.00
 Poland                   1.77      1.80      1.85      1.72
 Note: FRA  are for ask prices                              
 (Reporting by Sandor Peto, Editing by William Maclean)
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