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CEE MARKETS-Leu rebounds after CPI jump, regional GDP data eyed
November 10, 2017 / 11:08 AM / a month ago

CEE MARKETS-Leu rebounds after CPI jump, regional GDP data eyed

    * Romania's inflation surges to 2.6 pct, leu off 5-year low
    * CPI matches cbank forecast, but above analysts' projection
    * CEE GDP data due Tuesday seen showing robust growth
    * Forint soft, Hungarian c.bank seen easing policy further

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, Nov 10 (Reuters) - The leu
rebounded from five-year lows against the euro on Friday after
data showing Romanian inflation rose faster than expected in
October, fuelling expectations for policy tightening from the
central bank (NBR). 
    Adding to signs of overheating in the Romanian economy, the
country's inflation has been rapidly catching up with a rebound
across Central Europe since mid-2016.
    The data comes ahead of the release by the region's biggest
economies of third-quarter economic output figures on Tuesday,
which are expected to show continuing robust growth.
    Central bank policy was also in focus in Hungary, where the
forint softened on expectations the Hungarian central bank will 
ease policy further at its Nov. 21 meeting. 
    The leu firmed 0.2 percent versus the euro by 0954
GMT, to trade at 4.637, off Thursday's five-year low of 4.649.
    Romania's annual inflation ran at 2.6 percent in October,
compared with 1.8 percent in September and 1.2 percent in
August.
    The rise is in line with Thursday's revised inflation
forecast from the NBR for end-year inflation at 2.7 percent.
    The NBR, after its meeting on Tuesday, said that in future
it would focus on keeping interest rates near its benchmark rate
and be more flexible over the exchange rate.
    Governor Mugur Isarescu also said on Thursday that the leu's
weakness reflected a widening of the country's trade deficit,
but the currency was "relatively close" to its equilibrium
levels.
    The bank's new policy will face a test later this year when
government spending is expected to surge, increasing inflation
pressures.
    "Whereas we would expect EUR/RON to stabilize around current
levels, the latest move leaves the leu with a depreciation
of 2.3 percent against the euro since the beginning of the year,
despite strong economic conditions and a supportive global
environment," Raiffeisen analysts said in a note.
    Romania's 10-year government bond yield continued to rise,
by 2 basis points to 4.3 percent, but that was in line with
yield gains across Europe amid a sell-off in German Bunds. 

    Hungarian yields also rebounded after a sharp decline to
around record lows on Thursday, which pushed the country's
10-year yield below U.S. Treasuries.
    The forint eased 0.1 percent to 312.10 against the
euro. Market participants said there was a slight chance that
Fitch will improve Hungary's debt rating or its outlook in a
review later on Friday.
               CEE MARKETS  SNAPSH   AT  1054 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.533  25.542   +0.04   5.77%
                                 0       5       %  
 Hungary                    312.10  311.66  -0.14%  -1.05%
 forint                         00      00          
 Polish zloty               4.2292  4.2324   +0.08   4.13%
                                                 %  
 Romanian leu               4.6370  4.6445   +0.16  -2.20%
                                                 %  
 Croatian                   7.5367  7.5375   +0.01   0.24%
 kuna                                            %  
 Serbian                    118.41  118.67   +0.22   4.17%
 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                     1062.3  1060.5   +0.17   +15.2
                                 1       3       %      7%
 Budapest                   39718.  40273.  -1.38%   +24.1
                                02      66              1%
 Warsaw                     2461.5  2478.2  -0.67%   +26.3
                                 1       1              7%
 Bucharest                  7776.1  7746.9   +0.38   +9.75
                                 1       9       %       %
 Ljubljana                  792.97  788.58   +0.56   +10.5
                                                 %      0%
 Zagreb                     1849.2  1848.4   +0.04  -7.30%
                                 1       7       %  
 Belgrade                   737.33  734.99   +0.32   +2.78
                                                 %       %
 Sofia                      668.72  671.73  -0.45%   +14.0
                                                        3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                     0.37   0.034   +112b   +3bps
                                                ps  
   5-year                     0.73       0   +108b   +0bps
                                                ps  
   10-year                    1.64   0.041   +125b   +3bps
                                                ps  
 Poland                                                   
   2-year                    1.624   0.014   +237b   +1bps
                                                ps  
   5-year                    2.625  -0.004   +298b   +0bps
                                                ps  
   10-year                    3.44   0.021   +305b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.97       1    1.23       0
               IBOR=>                               
 Hungary               <BU    0.09    0.09    0.14    0.03
               BOR=>                                
 Poland                <WI    1.77   1.805    1.89    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
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 (Reporting by Sandor Peto; editing by Emelia Sithole-Matarise)
  
 
 

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