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CEE MARKETS-Forint firms in muted reaction to S&P outlook upgrade
August 28, 2017 / 9:39 AM / 24 days ago

CEE MARKETS-Forint firms in muted reaction to S&P outlook upgrade

    * Surprise S&P outlook rise lifts forint, OTP Bank stocks
    * Impact is marginal, investors focus on dovish monetary
policy
    * CEE assets are mixed, London holiday cuts turnover
    * Leu rebounds but stays near 5-year low on pension reform
fear

    By Sandor Peto
    BUDAPEST, Aug 28 (Reuters) - The forint firmed slightly on
Monday in a cautious reaction to a surprise move by rating
agency Standard & Poor's late on Friday to raise the outlook on
Hungary's sovereign rating to "positive".
    While central European currencies were mixed, the forint
 traded 0.2 percent higher at 304.10 against the euro
at 0821 GMT.
    S&P, after Friday's markets close, reaffirmed Hungary's
rating at BBB-, but raised the outlook to positive from stable,
citing a better growth and external balance outlook which also
continues to improve the financial sector.
    Analysts said Moody's may also lift its own rating outlook
for Hungary to positive in a review due on Oct. 20. However they
said any upgrade in Hungary's rating was unlikely to come before
parliamentary elections in April 2018.
    The big breakthrough was last year when the agencies lifted
Hungary's ratings back into investment grade, market
participants said.    
    With London markets closed due to a holiday, foreign
investors mostly stayed off and the full impact of the outlook
change will be visible only on Tuesday, they said.
    "Hungarian (government) bonds are unchanged and a big impact
is unlikely, with yields below (better-rated) Poland," one
Budapest-based trader said.
    "The global sentiment looks supportive as neither the Fed or
the ECB were giving hawkish signals (at a meeting of central
bankers) last week," the trader added.
    The forint moved closer to the 28-month highs hit last week
at 301.72, before a signal for further monetary easing from the
National Bank of Hungary knocked the currency down to 305.11.
    Monday's firming was marginal. The forint got additional
help from a weakening of the dollar over the weekend. A dollar
sell-off often lifts regional currencies against the euro as
well.
    "If the dollar continues to weaken, to 253 against the
forint or even 250, that may lift the euro/forint as well
to 302 again," one currency dealer said.
    At the moment, "the (forint and government bond) market is
more focused on potential MNB (central bank) action to soften
the HUF (forint)," Raiffeisen analyst Gunter Deuber said in a
note.
    Budapest's main equities index was treading water as
the main stocks hovered near technical levels around multi-year
highs. 
    OTP Bank hit a new 10-year high at 10,455 forints 
($41.03), while oil group MOL retreated from six-year
highs.
    Elsewhere in the region, the leu regained some
ground, returning to the firm side of the key 4.6 line against
the euro, but stayed near Friday's five-year lows.
    It fell on Friday after Romania's government said it may
downsize private pension fund contributions from next year,
which could hurt demand for Romanian assets.     
    
               CEE MARKETS  SNAPSH   AT  1021 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.105  26.096  -0.03%   3.46%
                                 0       5          
 Hungary                    304.10  304.76   +0.22   1.55%
 forint                         00      50       %  
 Polish zloty               4.2580  4.2519  -0.14%   3.43%
 Romanian leu               4.5955  4.6005   +0.11  -1.32%
                                                 %  
 Croatian                   7.4130  7.4155   +0.03   1.92%
 kuna                                            %  
 Serbian                    118.99  119.22   +0.19   3.66%
 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                     1035.3  1036.5  -0.12%   +12.3
                                 5       6              4%
 Budapest                   37978.  38011.  -0.09%   +18.6
                                61      33              7%
 Warsaw                     2480.5  2471.7   +0.36   +27.3
                                 7       4       %      4%
 Bucharest                  8356.1  8378.9  -0.27%   +17.9
                                 4       3              4%
 Ljubljana                  828.89  826.86   +0.25   +15.5
                                                 %      1%
 Zagreb                     1900.1  1901.3  -0.06%  -4.75%
                                 4       5          
 Belgrade                   724.22  724.11   +0.02   +0.95
                                                 %       %
 Sofia                      714.14  714.03   +0.02   +21.7
                                                 %      8%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.016  -0.021   +072b   -2bps
                                                ps  
   5-year                    0.045   0.012   +035b   +1bps
                                                ps  
   10-year                   0.916   0.032   +053b   +3bps
                                                ps  
 Poland                                                   
   2-year                    1.728   0.005   +246b   +1bps
                                                ps  
   5-year                    2.624   0.016   +293b   +1bps
                                                ps  
   10-year                   3.295   0.004   +291b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR     0.6    0.71     0.8       0
               IBOR=>                               
 Hungary               <BU    0.21    0.25    0.31    0.15
               BOR=>                                
 Poland                <WI    1.77    1.79    1.85    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 

($1 = 254.8100 forints)

 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Adrian Croft)
  
 
 

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