Reuters logo
CEE MARKETS-Leu, on CPI jump, misses USD-driven fx/bond firming
October 11, 2017 / 9:13 AM / in 12 days

CEE MARKETS-Leu, on CPI jump, misses USD-driven fx/bond firming

    * Continuing dollar slide fuels forint, zloty rally
    * Sept CPI jump keeps lid on Romanian fx, bond prices
    * Czech bond auction seen drawing "reasonable
demand"-traders

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, Oct 11 (Reuters) - The leu bucked a
Central European currency rally on Wednesday due to worries over
a bigger-than-expected jump in Romania's inflation and tension
over a planned government reshuffle.
    The region's most liquid units, the zloty and the
forint, firmed 0.3 and 0.2 percent, respectively,
against the euro.
    They have been strengthened in the past two days by money
flowing out of the weakening dollar.
    The leu, after a rise earlier this month amid a liquidity
squeeze in Romanian interbank markets, has missed that rally.
    Prime Minister Mihai Tudose announced on Monday that he
considered a government reshuffle due to corruption allegations
against three ministers, in a move that could create tension
within the ruling Social Democrat party.
    On top of political worries, September figures released
early on Wednesday showed a continuing rise in Romanian annual
inflation, to a higher-than expected 1.8 percent from 1.2
percent in August.
    The leu eased a tad to 4.587. 
    Romania's 3-year bonds traded at a steady 2.29 percent
yields, even though Tuesday's one billion euros eurobond issue
eased the government's financing need, while Polish and
Hungarian yields fell 4-5 basis points across the curve. 
    Analysts and the Romanian central bank (NBR) are now likely
to revise their year-end inflation forecasts upwards.
    Ionut Dumitru, chief economist at Raiffeisen Bank in
Bucharest, said his already raised estimate of 2.4 percent "has
now probably become optimistic."
    "The central bank will tighten (policies) sooner rather than
later, probably," he said.
    "In November it will probably further reduce the corridor
between its lending and deposit facilities, which I still see as
a tightening. Benchmark interest rate tightening will come next
year," Dumitru added.
    An expected rise in government spending later this year
could help ease the liquidity squeeze, for which the government
has criticised the NBR, but could increase worries over a rise
in inflation pressure and the budget deficit. 
    The bank, fearing speculative capital flows, has said
signals from the European Central Bank and the Polish central
bank (NBP) could influence local decisions.
    While the ECB hesitates, the NBP is unlikely to lift rates
any time soon, though a surge in forward rate agreements this
month priced in a start of rate hikes within 12
months. Most analysts have projected a later rise. 
    Elsewhere in the region, a Czech government bond auction is
expected to generate "reasonable demand", Komercni Banka traders
said in a note, adding that the government could cut the supply
if the prices offered are too low.
    
               CEE MARKETS  SNAPSH   AT  1020 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.890  25.869  -0.08%   4.31%
                                 0       5          
 Hungary                    309.83  310.65   +0.26  -0.33%
 forint                         00      00       %  
 Polish zloty               4.2845  4.2926   +0.19   2.79%
                                                 %  
 Romanian leu               4.5870  4.5860  -0.02%  -1.13%
 Croatian                   7.5015  7.5025   +0.01   0.71%
 kuna                                            %  
 Serbian                    119.37  119.43   +0.05   3.33%
 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                     1053.3  1050.0   +0.31   +14.2
                                 5       6       %      9%
 Budapest                   37978.  38031.  -0.14%   +18.6
                                25      67              7%
 Warsaw                     2534.8  2516.4   +0.73   +30.1
                                 8       9       %      3%
 Bucharest                  7999.5  8022.5  -0.29%   +12.9
                                 2       1              1%
 Ljubljana                  812.87  812.39   +0.06   +13.2
                                                 %      8%
 Zagreb                     1829.5  1820.6   +0.49  -8.29%
                                 2       6       %  
 Belgrade                   725.95  727.23  -0.18%   +1.20
                                                         %
 Sofia                      674.46  676.26  -0.27%   +15.0
                                                        1%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.142   0.205   +084b   +21bp
                                                ps       s
   5-year                    0.517   0.025   +078b   +2bps
                                                ps  
   10-year                   1.401   0.059   +094b   +5bps
                                                ps  
 Poland                                                   
   2-year                    1.747   -0.02   +245b   -1bps
                                                ps  
   5-year                     2.73  -0.012   +299b   -2bps
                                                ps  
   10-year                   3.436  -0.036   +298b   -5bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.75    0.91    1.02       0
               IBOR=>                               
 Hungary               <BU    0.09    0.13    0.18    0.03
               BOR=>                                
 Poland                <WI   1.766   1.814   1.881    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Jason Hovet in Prague/Marcin Goettig
in Warsaw; editing by Peter Graff)
  
 
 

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below