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CEE MARKETS-Zloty weakens as Poland cuts GDP forecast
November 30, 2016 / 10:00 AM / 10 months ago

CEE MARKETS-Zloty weakens as Poland cuts GDP forecast

* Polish 2016 GDP growth forecast cut to 2.5-3 pct
    * Zloty eases slightly vs forint,
    * Equities markets mostly higher
    * KGHM underperforms Warsaw index after mine accident

    By Sandor Peto
    BUDAPEST, Nov 30 (Reuters) - The zloty weakened slightly on
Wednesday, bucking a rise in other Central European currencies,
after a downward revision to Poland's economic growth forecasts
for 2016.
    Polish Finance Minister Mateusz Morawiecki said late on
Tuesday that the Polish economy could grow by between 2.5
percent and 3 percent this year, cutting a previous forecast of
3.4 percent. 
    The zloty was trading at 4.4375 against the euro
by 0915 GMT, a shade weaker from Tuesday.
    The forint firmed by 0.3 percent to 310.98,
rebounding from Tuesday's four-month low at a technical
resistance level of 312.05.
    Preliminary third-quarter economic output figures have
showed a slowdown across Central Europe, with economists largely
blaming slower inflows of European Union investment aid.
 
    Household consumption has remained robust, supported by
governments cutting tax and lifting spending to fight a flight
of skilled labour to richer Western states and prepare for
elections.
    Romania will hold parliamentary elections in December and
Hungary in 2018. Morawiecki said that local governments curbed
investments to accelerate them closer to municipal elections in
2018.
    The breakdown of Poland's third-quarter GDP published on
Wednesday showed a pick-up in household consumption and an
accelerated decline in investments. 
    Flash inflation figures for November due at 1300 GMT will
also provide important input for the Polish central bank.
    Rising consumption in the region has increased the risk of a
sharp rebound in inflation.
    Most analysts predicted before Donald Trump's the U.S.
presidential election that CEE regional central banks would not
cut interest rates further, with their view strengthened by a
jump in government bond yields since Donald Trump's surprise
election victory.
    Hungary's central bank, however, has continued to ease
policy by boosting forint liquidity in markets and reaffirmed on
Tuesday that ultra-loose monetary conditions could stay for
years. 
    Government bonds were mixed.
    Poland's 10-year yield dropped 3 basis points to 3.55
percent while the ultralow Czech two-year yield 
dipped below the corresponding Bund yield.
    Czech markets, which usually ignore local politics, shrugged
off Tuesday's approval in the Czech lower house of a bill
designed to limit politicians' business interests and clip the
wings of billionaire Finance Minister Andrej Babis.  
    Shares in Polish copper producer KGHM were flat,
underperforming a 0.9 percent rise in the Warsaw equities index
 after a tremor killed at least three workers in its
Rudna copper mine. 
    
           CEE      SNAP   AT  1015       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0  -0.0  -0.2
 crown     =>        660   635    1%    5%
 Hungary   <EURHUF  310.  311.   +0.  1.18
 forint    =>       9800  8250   27%     %
 Polish    <EURPLN  4.43  4.43  -0.0  -4.0
 zloty     =>         75    65    2%    5%
 Romanian  <EURRON  4.50  4.51   +0.  0.26
 leu       =>         74    90   26%     %
 Croatian  <EURHRK  7.53  7.53   +0.  1.39
 kuna      =>         40    75   05%     %
 Serbian   <EURRSD  122.  123.   +0.  -1.2
 dinar     =>       9600  1300   14%    1%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             879.  879.  -0.0  -8.0
                      12    33    2%    7%
 Budapest           3005  2981   +0.   +25
                    1.38  6.30   79%  .63%
 Warsaw    <.WIG20  1796  1780   +0.  -3.3
           >         .70   .04   94%    6%
 Ljubljan  <.SBITO  689.  693.  -0.5  -0.9
 a         P>         79    81    8%    1%
 Zagreb    <.CRBEX  1992  1992  -0.0   +17
           >         .33   .47    1%  .92%
 Belgrade  <.BELEX  692.  692.  -0.0   +7.
           15>        17    21    1%   46%
 Sofia     <.SOFIX  561.  559.   +0.   +21
           >          65    94   31%  .86%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.7  -0.0  -003  -7bp
           RR>        76    62   bps     s
   5-year  <CZ5YT=  -0.1  -0.0   +03  -2bp
           RR>        34    33  3bps     s
           <CZ10YT  0.54  -0.0   +03   +1b
 10-year   =RR>        8    11  4bps    ps
 Poland                                   
   2-year  <PL2YT=  1.92  0.00   +26   +0b
           RR>         4     3  7bps    ps
   5-year  <PL5YT=  2.85  -0.0   +33   +0b
           RR>         4     2  2bps    ps
           <PL10YT  3.58  -0.0   +33   +1b
 10-year   =RR>             08  7bps    ps
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.29  0.27  0.26     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.51  0.52  0.55  0.56
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.76  1.76  1.78  1.73
           ><WIBOR           5        
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 
 (Editing by David Goodman)

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