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CEE MARKETS-Forint regains some ground, central bank holds fire
August 22, 2017 / 2:12 PM / a month ago

CEE MARKETS-Forint regains some ground, central bank holds fire

    * Hungarian central bank keeps rates on hold as expected
    * Forint rebounds as central bank does not try to talk it
down
    * Hungarian bonds firm slightly, bucking retreat in Poland
    * OTP Bank shares drive Budapest index to record high

 (Adds Hungarian central bank decision and comments)
    By Sandor Peto
    BUDAPEST, Aug 22 (Reuters) - The forint recouped some of its
early losses on Tuesday as the Hungarian central bank (NBH) did
not try to talk down the currency even though it retained its
dovish bias in its statement after its rate decision.
    The forint <EURHUF=< traded at 303.55 at 1338 GMT, weaker by
0.1 percent from Monday, while most Central European currencies
were rangebound.
    It was off the day's lows of 303.95, again moving closer to
27-month highs reached in early August at 302.95.
    The forint had weakened in early trade ahead of the NBH's
rate meeting because some market participants had expected the
bank to try to weaken the currency with its comments.
    The NBH, the region's most dovish central bank, kept
interest rates on hold and confirmed its dovish tilt, as
expected.
    Its only new reference to the exchange rate in its statement
was that improved investor perceptions about the region had led
to an appreciation of its currencies recently.
    "The forint firmed a bit after the statement because some
(investors) may have expected stronger comments from the central
bank about the forint's strength," a Budapest-based dealer said.
    "If nothing happens, the forint could strengthen through the
303 line ... in the next few days."  
    The Czech central bank early this month delivered the
European Union's first interest rate hike since 2012.
    Market pricing suggests that the timing of central banks'
reaction to a rise in inflation will differ in the region, the
NBH said in its statement. 
    The NBH has pledged to keep the benchmark base rate
unchanged at 0.9 percent for a sustained period.
    June Hungarian gross wages figures released on Tuesday
showed an annual rise of 14.4 percent, maintaining the fastest
pace since 2005 and one of the fastest growth rates in Central
Europe.
    The Hungarian wage surge is still unlikely to lift annual
average inflation above the central bank's 3 percent target
before 2019, a Reuters poll of analysts indicated last week.

    Germany's 10-year Bund yield was marginally
higher on Tuesday, though near one-week lows.     
    Hungarian bonds were slightly firmer, with the yield of the
10-year bond dropping 2 basis points to 3.04 percent. The
corresponding Polish yield rose 3 basis points 
from four-week lows to 3.32 percent.
    Hungary sold 3-month Treasury bills at an average yield of
zero on Tuesday for the first time ever.
    Budapest's main equities index rose to a record high,
driven by an almost 3 percent rise in the shares of OTP Bank
. Budapest led a rise of equities in the region, which
tracked Western European peers higher.
               CEE MARKETS  SNAPSH   AT  1538 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.085  26.084   +0.00   3.53%
                                 0       5       %  
 Hungary                    303.55  303.31  -0.08%   1.74%
 forint                         00      50          
 Polish zloty               4.2780  4.2750  -0.07%   2.94%
 Romanian leu               4.5870  4.5871   +0.00  -1.13%
                                                 %  
 Croatian                   7.4045  7.4035  -0.01%   2.03%
 kuna                                               
 Serbian                    119.30  119.38   +0.07   3.39%
 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                     1033.7  1032.0   +0.16   +12.1
                                 0       4       %      6%
 Budapest                   37572.  37097.   +1.28   +17.4
                                87      85       %      0%
 Warsaw                     2389.2  2377.2   +0.50   +22.6
                                 7       8       %      6%
 Bucharest                  8363.3  8317.9   +0.55   +18.0
                                 1       5       %      4%
 Ljubljana                  816.59  809.00   +0.94   +13.8
                                                 %      0%
 Zagreb                     1902.4  1898.4   +0.21  -4.63%
                                 7       0       %  
 Belgrade                   722.78  723.00  -0.03%   +0.75
                                                         %
 Sofia                      718.97  720.71  -0.24%   +22.6
                                                        0%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.026  -0.026   +069b   -2bps
                                                ps  
   5-year                    0.058  -0.018   +034b   -1bps
                                                ps  
   10-year                   0.876  -0.007   +047b   -1bps
                                                ps  
 Poland                                                   
   2-year                    1.777  -0.005   +250b   +0bps
                                                ps  
   5-year                    2.647   0.013   +293b   +2bps
                                                ps  
   10-year                   3.332   0.032   +292b   +3bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR     0.6     0.7    0.81       0
               IBOR=>                               
 Hungary               <BU    0.22    0.28   0.345    0.15
               BOR=>                                
 Poland                <WI    1.78     1.8    1.85    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Sandor Peto; editing by Mark Heinrich)
  
 
 

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