March 12, 2019 / 4:32 PM / 11 days ago

CEE MARKETS-Leu plunges as Romanian CPI, trade deficit jump

    * Romania's inflation picks up more than expected in Feb
    * Investors await changes in Romanian taxes
    * Leu easing unlikely to trigger central bank action

 (Recasts with new comments, graphics, comparison with Poland)
    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, March 12 (Reuters) - The leu posted its
biggest daily loss in almost two months on  Tuesday after
Romania reported a rise in its inflation and trade deficit,
which is unlikely to trigger central bank action.
    The outlook is blurred by expected changes to new taxes on
sectors including banks launched this year, which have knocked
down Romanian asset prices and risk a credit rating outlook
downgrade from Standard & Poor's.    
    The leu, well underperforming other Central
European currencies, shed a third of a percent against the euro,
trading at 4.7635 at 1454 GMT. It earlier touched its weakest
level in six weeks at 4.7697.
    It also set a 5-week low against the zloty.
    The Polish and Romanian central banks have the same
inflation targets of 1.5-3.5 percent, but Poland's inflation has
been running below the range, while Romania's own rate rose
above it in February, to 3.8 percent.    
    Romania's trade deficit, meanwhile, widened by more than 60
percent on the year in January to 1.259 billion euros ($1.42
billion), fuelled by a rise in the consumption of imported
goods.
    The tax on bank assets has complicated monetary policy
because it has been linked to interbank rates (ROBOR). 
    "With inflationary pressures persisting, economic growth
slowing, and NBR (central bank) policy flexibility on rates
still limited by the bank levy level linked to ROBOR, the
central bank dilemma is only getting worse," ING analysts said
in a note.
     "The NBR is likely to accept a weaker leu and short-term
inflation overshooting its target, perhaps even at the cost of
its credibility, as currency vulnerabilities are on the rise."
    The leu could remain under pressure from an expected
slowdown in economic growth, Romania's widening current account
and budget deficits and political uncertainty, Commerzbank
analysts said in a note.    
    Romanian government bond yields jumped. 
    Romanian 5-year bond yields were around 4.14 percent, up 10
basis points, while the corresponding Polish yield
was steady at 2.22 percent.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1554 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6650   25.6650    +0.00%    +0.16%
 crown      >                                       
 Hungary    <EURHUF=  315.4300  315.6500    +0.07%    +1.79%
 forint     >                                       
 Polish     <EURPLN=    4.2990    4.3036    +0.11%    -0.22%
 zloty      >                                       
 Romanian   <EURRON=    4.7635    4.7475    -0.34%    -2.30%
 leu        >                                       
 Croatian   <EURHRK=    7.4180    7.4125    -0.07%    -0.11%
 kuna       >                                       
 Serbian    <EURRSD=  118.1300  118.0800    -0.04%    +0.14%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1062.29  1059.680    +0.25%    +7.68%
                                       0            
 Budapest             40784.48  40819.55    -0.09%    +4.20%
 Warsaw                2304.63   2300.22    +0.19%    +1.23%
 Bucharest             7891.76   7935.54    -0.55%    +6.88%
 Ljubljana  <.SBITOP    870.21    873.24    -0.35%    +8.20%
            >                                       
 Zagreb                1766.20   1763.53    +0.15%    +0.99%
 Belgrade   <.BELEX1    698.28    695.46    +0.41%    -8.32%
            5>                                      
 Sofia                  578.23    583.73    -0.94%    -2.73%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8050    0.0290   +235bps     +3bps
            R>                                      
   5-year   <CZ5YT=R    1.7910    0.0060   +218bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.8880    0.0120   +182bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6070   -0.1180   +215bps    -12bps
            R>                                      
   5-year   <PL5YT=R    2.2220   -0.0110   +261bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.8830   -0.0010   +282bps     +0bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.19      2.25      2.26      2.03
            <PRIBOR=                                
            >                                       
 Hungary                  0.42      0.61      0.81      0.14
                                                    
 Poland                   1.75      1.73      1.75      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
    


($1 = 0.8869 euros)

    
 (Reporting by Sandor Peto and Luiza Ilie; Editing by Angus
MacSwan and Emelia Sithole-Matarise)
  
 
 
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