Bonds News

CEE MARKETS-Leu regains ground as PM's ouster removes uncertainty

    BUDAPEST, June 21 (Reuters) - The Romanian leu
firmed up to 0.2 percent on Wednesday, edging away from
4-1/2-year lows, as Prime Minister Sorin Grindeanu's dismissal
in a parliamentary no-confidence vote raised prospects of a
stable governing majority.
    Romania's ruling leftists overwhelmingly voted to oust
Grindeanu's six-month-old government on Wednesday, opening the
way for a new cabinet with a comfortable parliament majority
over the next few weeks.
    "Some political uncertainties have dissipated ... the no
confidence vote revealed that there is a parliamentary majority
that can support a new government, theoretically," said Ciprian
Dascalu, chief economist at ING Bank in Bucharest. 
    The Social Democrat Party (PSD) and a coalition partner
withdrew support for Grindeanu a week ago saying he had failed
to roll out their governing programme, leaving his fate in the
    At 1217 GMT, the leu was 0.15 percent stronger on the day,
off earlier session highs. However, recent falls still left the
unit the worst performer in central Europe, down 1.2 percent
since the start of the year. Other regional currencies also
    The forint was a shade stronger, pulling back from
a one-month-low caused by Tuesday's decision by the National
Bank of Hungary (NBH) to push more funds than expected from its
three-month deposits into the economy to help cut borrowing
    The NBH, seen as the most dovish central bank in central
Europe, also lowered its inflation forecasts for the next two
years and affirmed its readiness to ease monetary conditions
further if below-target inflation persists.
    "This supports our call of limited HUF appreciation
potential going forward as the (NBH) will remain reluctant to
end its expansionary monetary policy," analysts at Raiffeisen
Bank said in a note.
    "We would expect to see HUF underperforming its peers PLN
(Polish zloty) and CZK (Czech crown) over the coming months as
their central banks are expected to tighten monetary policy
    Before Tuesday's policy meeting, analysts polled by Reuters
had forecast the Hungarian base rate staying unchanged at least
until the second quarter of 2019.
    Czech central bank Governor Jiri Rusnok was quoted as saying
on Wednesday that the strength of the crown, trading on the
strong side of its former cap on its value at 27 to the euro,
could be a reason for a slower rise in interest rates.

    A currency dealer said the crown was likely to stay in a
range between 26.150-26.450 in the coming days.
               CEE MARKETS  SNAPSH   AT  1417 CET         
                            Latest  Previo  Daily   Change
                            bid     close   change  in
 Czech crown                26.260  26.339   +0.30   2.84%
                                 0       0       %  
 Hungary                    309.05  309.16   +0.04  -0.07%
 forint                         00      50       %  
 Polish zloty               4.2360  4.2445   +0.20   3.96%
 Romanian leu               4.5905  4.5975   +0.15  -1.21%
 Croatian                   7.4180  7.4195   +0.02   1.85%
 kuna                                            %  
 Serbian                    121.62  121.79   +0.14   1.42%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            Latest  Previo  Daily   Change
                                    close   change  in
 Prague                     993.72  998.21  -0.45%   +7.82
 Budapest                   35896.  35989.  -0.26%   +12.1
                                47      69              7%
 Warsaw                     2290.2  2302.8  -0.54%   +17.5
                                 9       3              8%
 Bucharest                  8353.3  8376.5  -0.28%   +17.9
                                 7       0              0%
 Ljubljana                  790.92  790.35   +0.07   +10.2
                                                 %      2%
 Zagreb                     1855.8  1856.0  -0.01%  -6.97%
                                 1       3          
 Belgrade                   704.04  703.95   +0.01  -1.86%
 Sofia                      683.85  687.32  -0.50%   +16.6
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
   2-year                    0.048       0   +068b   -1bps
   5-year                   -0.031   0.012   +036b   +0bps
   10-year                   0.935    0.04   +067b   +4bps
   2-year                    1.955   -0.06   +258b   -7bps
   5-year                    2.627  -0.016   +302b   -3bps
   10-year                   3.207   0.039   +294b   +4bps
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
 Czech Rep             <PR    0.34    0.41     0.5       0
 Hungary               <BU    0.19   0.215   0.255    0.15
 Poland                <WI    1.75   1.764   1.793    1.73
 Note: FRA     are for ask                                
 quotes        prices                               
 (Reporting by Luiza Ilie and Radu-Sorin Marinas; Writing by
Gergely Szakacs; Editing by Andrew Heavens and Pritha Sarkar)