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CEE MARKETS-Forint eases ahead of cbank swap tender; zloty hit by reform fears
September 25, 2017 / 9:54 AM / 22 days ago

CEE MARKETS-Forint eases ahead of cbank swap tender; zloty hit by reform fears

    By Sandor Peto
    BUDAPEST, Sept 25 (Reuters) - The forint and zloty eased
slightly on Monday ahead of a central bank (NBH) liquidity
tender in Budapest and on worries over Poland's judicial
reforms, which have been criticised by European Union partners.
    Polish President Andrzej Duda is set to unveil his own
proposals on Monday, which may be different from previously
announced government plans, and a meeting of EU ministers in
Brussels could add to pressure over measures that critics say
will damage the rule of law in Poland. 
    While equities mostly eased in Central Europe, traders did
not see any significant impact from elections in Germany, the
region's biggest export market and a key power in the EU.
    German Chancellor Angela Merkel won a fourth term in
Sunday's vote but will face tough coalition talks and harsh
opposition criticism after support for the far-right surged.   
    "That is not a reason for happiness, but overall there was
no huge surprise and the euro/dollar cross has not changed much
either," one fixed-income trader said in Budapest.
    "As long as there is no huge trouble about the coalition
talks, any big impact is unlikely." 
    The Hungarian forint tested four-month lows
against the euro and was trading at 310.40 by 0838 GMT.
    In the short-term it could fall as low as 312, down from
last-month's 28-month highs beyond 302, another dealer said. 
The key factor is the monetary easing measures announced by the
NBH last week, when it also cut its inflation forecasts, the
dealer said. 
    The measures, including a cut in the central bank's
overnight deposit rate, have pushed Hungarian debt yields to
record lows, and short-term market interest rates to negative
territory.
    The bank could pump further forint liquidity into domestic
markets through its foreign exchange swap tenders on
Monday.
    "The key thing is the one-year swaps amount ... If it is
high, the yield on three-year bonds may fall to 0.35 percent
from 0.4 in the secondary market now," the fixed-income trader
said.
    The zloty eased by 0.1 percent to 4.2724 versus
the euro.
    "Given the uncertain political situation in the country and
in Germany, in the short term there is a risk of a slight
increase in the EURPLN (zloty weakening)," ING analysts said in
a note, adding that the currency could firm in the longer term.
    The Czech crown was steady at 26.036 against the
euro ahead of the Czech central bank's meeting on Wednesday. 
    "The bank will wait on a further interest rate rise until
November forecasts," CSOB analysts said in a note. 
    "However, nobody will be left in doubt that further rate
increases are really around the corner in light of fast economic
and wage growth."    
               CEE MARKETS  SNAPSH   AT  1038 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.036  26.039   +0.01   3.73%
                                 0       0       %  
 Hungary                    310.40  309.88  -0.17%  -0.51%
 forint                         00      00          
 Polish zloty               4.2724  4.2673  -0.12%   3.08%
 Romanian leu               4.5955  4.5983   +0.06  -1.32%
                                                 %  
 Croatian                   7.4850  7.4845  -0.01%   0.94%
 kuna                                               
 Serbian                    119.55  119.40  -0.13%   3.18%
 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                     1044.2  1046.5  -0.22%   +13.3
                                 4       1              1%
 Budapest                   38118.  38178.  -0.16%   +19.1
                                49      63              1%
 Warsaw                     2474.3  2480.7  -0.26%   +27.0
                                 8       3              3%
 Bucharest                  7852.3  7848.1   +0.05   +10.8
                                 8       0       %      3%
 Ljubljana                  796.41  799.42  -0.38%   +10.9
                                                        8%
 Zagreb                     1823.1  1829.4  -0.34%  -8.61%
                                 5       2          
 Belgrade                   725.66  725.19   +0.06   +1.16
                                                 %       %
 Sofia                      676.90  678.65  -0.26%   +15.4
                                                        3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.056   0.282   +074b   +28bp
                                                ps       s
   5-year                    0.227       0   +050b   +1bps
                                                ps  
   10-year                   1.126       0   +069b   +2bps
                                                ps  
 Poland                                                   
   2-year                    1.754  -0.038   +244b   -4bps
                                                ps  
   5-year                    2.647  -0.016   +292b   +0bps
                                                ps  
   10-year                   3.319  -0.023   +288b   -1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.69    0.85    0.94       0
               IBOR=>                               
 Hungary               <BU    0.02    0.09    0.12    0.05
               BOR=>                                
 Poland                <WI    1.77    1.79    1.87    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Jason Hovet in Prague; Editing by
David Goodman)
  
 
 

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