October 16, 2017 / 2:31 PM / 5 months ago

CEE MARKETS-Zloty rallies on data, rate hike bets boost Czech crown

    * Crown strongest vs euro for years on rate hike bets
    * Zloty, forint firms to multi-week highs
    * Zloty ignores dropping IMF credit line, helped by data
    * Bucharest rejects all bids at debt auction again

 (Adds Polish economic data, dealer quote, Hungarian and
Romanian tenders)
    By Sandor Peto and Jason Hovet
    BUDAPEST, Oct 16 (Reuters) - Central European currencies
extended last week's gains on Monday, with interest rate hike
expectations lifting the Czech crown and improving current
account data buoying Poland's zloty.
    Global investor sentiment remains positive towards emerging
markets, dealers said.
    The zloty led the currency gains in Central Europe, touching
six-week highs and testing 3-month highs against the euro as
Poland's August current account deficit came in at 100 million
euros, well below expectations.
    At 1349 GMT it traded at 4.2355, up 0.4 percent.
    The deficit has narrowed even though the economy is growing
robustly, and a batch of Polish economic figures due this week
are expected to confirm this.
    "On Wednesday we will have industrial output and retail
sales data and that's what the market will focus on. Robust
readings may result in further zloty appreciation," said BZ WBK
dealer Adam Wardzilak.
    The zloty shrugged off an announcement made by the Finance
Ministry on Saturday that Poland would quit a precautionary
Flexible Credit Line from the International Monetary Fund.

    The crown traded at 25.755, up by a third of a
percentage point.
    It reached levels seen before the Czech central bank (CNB)
launched an intervention regime in 2013, and gained on chances
of more interest rate hikes to come.
    The Czech economy would benefit from a 50-75 basis point
interest rate increase before the end of 2018, CNB board member
Vojtech Benda was quoted as saying on Thursday.
    The currency usually ignores politics, and it has not been
affected by the prospect of Czech voters handing victory -
according to opinion polls - to tough-talking populist
billionaire Andrej Babis in a parliamentary election at the end
of this week.
    Babis has signalled he is ready to take a more combative
approach towards the European Union, though he is not expected
to strain ties with Brussels as much as the nationalist
governments in Poland and Hungary have done.
    The forint and the leu also firmed on
Monday, but underperformed the crown and the zloty.
    Hungarian central bank (NBH) Deputy Governor Marton Nagy
spurred expectations for further monetary easing in dovish
comments on Friday, but failed to talk down the forint.
    The forint even touched a 5-week high against the euro.
    The NBH's weekly fx swap auction on Monday did not weaken
the forint as the central bank did not tender the most liquid
12-month expiry, traders said.    
    Elsewhere, Romania is planning a controversial shakeup of
the judiciary, as has happened already in Poland, and that 
issue is weighing on Romanian assets.
    The government rejected all bids at a tender of 2019-expiry
bonds, its fourth failed auction this month.    
               CEE MARKETS  SNAPSH   AT  1549 CET         
                            Latest  Previo  Daily   Change
                            bid     close   change  in
 Czech crown                25.755  25.838   +0.32   4.86%
                                 0       5       %  
 Hungary                    307.80  308.41   +0.20   0.33%
 forint                         00      50       %  
 Polish zloty               4.2355  4.2525   +0.40   3.98%
 Romanian leu               4.5835  4.5877   +0.09  -1.06%
 Croatian                   7.5045  7.5095   +0.07   0.67%
 kuna                                            %  
 Serbian                    119.15  119.35   +0.17   3.52%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            Latest  Previo  Daily   Change
                                    close   change  in
 Prague                     1053.4  1053.0   +0.03   +14.3
                                 2       8       %      0%
 Budapest                   39009.  38894.   +0.29   +21.8
                                02      88       %      9%
 Warsaw                     2542.6  2528.1   +0.57   +30.5
                                 9       6       %      3%
 Bucharest                  8035.4  8034.9   +0.01   +13.4
                                 1       6       %      1%
 Ljubljana                  814.28  816.75  -0.30%   +13.4
 Zagreb                     1852.3  1862.4  -0.54%  -7.14%
                                 7       8          
 Belgrade                   730.90  727.24   +0.50   +1.89
                                                 %       %
 Sofia                      670.28  669.17   +0.17   +14.3
                                                 %      0%
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
   2-year                    0.092   0.155   +083b   +17bp
                                                ps       s
   5-year                    0.479  -0.013   +081b   +0bps
   10-year                   1.362  -0.005   +097b   +1bps
   2-year                    1.694  -0.011   +243b   +0bps
   5-year                    2.642  -0.024   +297b   -1bps
   10-year                   3.284  -0.028   +289b   -2bps
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
 Czech Rep             <PR    0.78    0.94    1.07       0
 Hungary               <BU    0.07    0.09    0.12    0.03
 Poland                <WI   1.772   1.806   1.866    1.73
 Note: FRA     are for ask                                
 quotes        prices                               

 (Reporting by Sandor Peto Additional reporting by Agnieszka
Barteczko and Bartosz Chmielewski in Warsaw Editing by Gareth
0 : 0
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