November 27, 2017 / 11:10 AM / 21 days ago

CEE MARKETS-Bonds strength, German news help forint rebound to 3-week high

    * Forint recovers as foreigners buy Hungarian bonds -traders
    * German economic, political news support CEE currencies
    * Polish central banker Lon sees no rate hike in next 12
months
    * Serbia sells euro in market, dinar rebounds from 12-week
lows

    By Sandor Peto
    BUDAPEST, Nov 27 (Reuters) - The forint set 3-week highs on
Monday, outperforming Central European peers, after plans by the
Hungarian central bank (NBH) to push down long-term interest
rates triggered bond buying.
    The forint traded at 310.8 against the euro at
1009 GMT, firmer by 0.4 percent. The zloty was steady
and the Czech crown marginally firmer.
    The NBH announced last week that it would launch interest
rate swap selling and mortgage bond buying programmes next year
to encourage cheap fixed-rate mortgage lending.
    The plans, interpreted as further monetary easing by the
region's most dovish central bank, initially weakened the forint
to seven-month lows at 314.2.
    But the sell-off got reversed as the plans led to a buying
of government bonds, which pushed the middle and the end of
their yield curve to record lows last week.
    "Data on foreigners' bond holding comes with a
few days of delay," one Budapest-based trader said.
    "The data to be published this week could show a rise to
above 3.6 trillion forints (from 3.56 trillion forints)," the
trader added.
    Hungarian bond yields changed little from Friday's fixing,
with 10-year papers trading at 2.05 percent.
    Central European currencies had support from recent strong
economic data from Germany, the region's main export market.
    Germany's Social Democrats's agreement to hold talks with
Angela Merkel on renewing their outgoing coalition government
was viewed positively.
    "In theory, it is good if Germany has a stable government...
though I am not sure that this is what is actually driving the
forint," said Erste analyst Orsolya Nyeste.
    Another Budapest-based trader said some investors reversed 
forint buying as the market digested the NBH announcements.
    "It is still a long time until the NBH programmes start, and
their market impact remains to be seen," the trader said.
    The NBH's loose policy stands in contrast with a shift
towards hawkish bias in the region, and that remains a negative
factor for the forint, Nyeste said.
    Polish central banker Eryk Lon, however, told state news
agency PAP that fresh economic forecasts increased the chances
of interest rates remaining stable for at least the next 12
months.
    Elsewhere, the Serbian central bank lifted the dinar
 to 119.31 against the euro from 12-week lows at
119.72, by selling euros in the market.
    The dinar had been weakened in the past weeks by demand for
euros due to the issue of Serbia's first savings bonds, partly
denominated in euro.  
    
               CEE MARKETS  SNAPSH   AT  1109 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.440  25.452   +0.05   6.16%
                                 0       0       %  
 Hungary                    310.80  312.03   +0.40  -0.64%
 forint                         00      00       %  
 Polish zloty               4.2078  4.2078   +0.00   4.66%
                                                 %  
 Romanian leu               4.6400  4.6403   +0.01  -2.26%
                                                 %  
 Croatian                   7.5590  7.5605   +0.02  -0.05%
 kuna                                            %  
 Serbian                    119.31  119.20  -0.09%   3.39%
 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                     1053.3  1054.6  -0.12%   +14.3
                                 8       7              0%
 Budapest                   39675.  39709.  -0.08%   +23.9
                                31      00              7%
 Warsaw                     2476.1  2479.2  -0.13%   +27.1
                                 4       5              2%
 Bucharest                  7767.4  7782.8  -0.20%   +9.63
                                 6       0               %
 Ljubljana                  779.98  782.95  -0.38%   +8.69
                                                         %
 Zagreb                     1863.3  1859.9   +0.18  -6.59%
                                 0       2       %  
 Belgrade                   739.63  739.41   +0.03   +3.10
                                                 %       %
 Sofia                      665.53  667.37  -0.28%   +13.4
                                                        9%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                     0.46   0.138   +115b   +13bp
                                                ps       s
   5-year                    1.036   0.149   +136b   +15bp
                                                ps       s
   10-year                   1.772   0.013   +142b   +3bps
                                                ps  
 Poland                                                   
   2-year                     1.54  -0.005   +223b   -1bps
                                                ps  
   5-year                    2.544  -0.005   +287b   -1bps
                                                ps  
   10-year                   3.335  -0.006   +298b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.03     1.2    1.33       0
               IBOR=>                               
 Hungary               <BU    0.03    0.06     0.1    0.03
               BOR=>                                
 Poland                <WI    1.78    1.83    1.91    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 

 (Additional reporting by Aleksandar Vasovic in Belgrade;
Editing by Richard Balmforth)
  
 
 

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