September 29, 2017 / 9:34 AM / 18 days ago

CEE MARKETS-Zloty rebounds from multi-month low ahead of CPI data

    * Zloty hits 6-1/2-month low o/night, rebounds on Friday
    * Polish CPI data may help zloty
    * Polish, Hungarian bonds firm again after earlier retreat
    * Crown tests 26 level vs euro again, rate hike seen

    By Sandor Peto and Marcin Goclowski
    BUDAPEST/WARSAW, Sept 29 (Reuters) - The zloty rebounded
from 6-1/2-month lows against the euro as a dollar rally was
losing steam in global markets and data due later on Friday are
seen showing a rise in Polish inflation.
    The zloty and the forint, Central Europe's most liquid
currencies, got sold off this week as investors flocked into the
dollar after hawkish comments from Federal Reserve Chair Janet
Yellen.
    Local factors also helped the currencies fall to multi-month
lows this week, mainly new Polish proposals for judiciary reform
which had angered the European Commission, and a new round of
monetary easing measures in Budapest.
    On Friday, the forint traded flat at 311.18
against the euro at 0843 GMT, while the zloty gained
0.2 percent to 4.308.
    Poland is due to release flash inflation figures for
September at 1200 GMT.
    Polish flash inflation data often provide investors with
good indications about the regionwide inflation trend. Analysts
expect annual inflation to pick up to 2 percent, from 1.8
percent in August.
    The zloty could remain under pressure from politics and this
week's rise in market interest rates in developed markets, but
"it might get some help from the September inflation figures,"
KBC analysts said in a note.
     "They can temporary turn market attention to the NBP
(Polish central bank) policy, which could be seen as too
dovish," they added.
    Most analysts do not expect the bank to start to lift
interest rates before late next year.
    Despite worries within the bank over negative zloty real
interest rates and a tight labour market, the inflation data are
unlikely to have any significant influence, ING analysts said in
a note.
    "Tolerance for surprise in terms of higher activity growth
or salaries is high, while, by now, we do not observe that it
significantly translates into an inflationary pressure," they
said.
    BZ WBK analysts did not rule out further zloty losses, if
Thursday's lows around 4.33 get broken, but global markets could
stabilize soon, and "positive fundamentals of Polish economy
will encourage investors to utilize recent zloty's depreciation
to purchase Polish currency," they said in a note.
    Hungarian government bonds, which reversed a rally after the
Yellen comments, firmed again on Friday, with yields dropping by
a few basis points, in tandem with Polish bonds.
    Elsewhere, the crown was testing 26 against the
euro, the highs it reached on the day of its Aug 3. rate hike,
the first in the European Union since 2012.
    The Czech central bank kept rates on hold at its meeting on
Wednesday, but its comments retained strong expectations for a
further rate hike at its next meeting in November.
    
               CEE MARKETS  SNAPSH   AT  1043 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.020  26.039   +0.07   3.79%
                                 0       0       %  
 Hungary                    311.18  311.13  -0.02%  -0.76%
 forint                         00      00          
 Polish zloty               4.3080  4.3154   +0.17   2.23%
                                                 %  
 Romanian leu               4.6000  4.6030   +0.07  -1.41%
                                                 %  
 Croatian                   7.4940  7.4915  -0.03%   0.82%
 kuna                                               
 Serbian                    118.99  119.25   +0.22   3.66%
 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                     1045.8  1043.6   +0.21   +13.4
                                 9       8       %      9%
 Budapest                   37597.  37191.   +1.09   +17.4
                                17      65       %      8%
 Warsaw                     2440.5  2427.0   +0.56   +25.2
                                 7       4       %      9%
 Bucharest                  7918.5  7934.6  -0.20%   +11.7
                                 7       3              6%
 Ljubljana                  797.68  800.48  -0.35%   +11.1
                                                        6%
 Zagreb                     1813.1  1821.3  -0.45%  -9.11%
                                 3       2          
 Belgrade                   721.97  723.17  -0.17%   +0.64
                                                         %
 Sofia                      690.63  689.37   +0.18   +17.7
                                                 %      7%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.157  -0.039   +086b   -4bps
                                                ps  
   5-year                    0.252   0.004   +053b   +3bps
                                                ps  
   10-year                   1.225  -0.003   +077b   +2bps
                                                ps  
 Poland                                                   
   2-year                    1.722  -0.001   +242b   +0bps
                                                ps  
   5-year                    2.676  -0.014   +296b   +1bps
                                                ps  
   10-year                   3.354  -0.013   +290b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.74    0.89    1.01       0
               IBOR=>                               
 Hungary               <BU    0.07     0.1    0.15    0.04
               BOR=>                                
 Poland                <WI    1.77    1.81    1.87    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 

 (Reporting by Sandor Peto)
  
 
 

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