April 1, 2019 / 9:23 AM / 6 months ago

CEE MARKETS-Chinese PMI outshines CEE, lifting currencies off multi-week lows

    * Czech, Polish PMIs stays in the contraction zone
    * HGood global mood on China help currencies regain ground
    * Romanian, Polish central banks seen keeping rates on hold

    By Sandor Peto
    BUDAPEST, April 1 (Reuters) - Central European currencies
gained on Monday after a good Chinese manufacturing PMI for
March outshone the region's own, weaker indexes.
    The Czech PMI dipped further below 50, the reading that
separates contraction from growth. At 47.3, it was the lowest
since 2012. Even so, the crown gained against the euro
to 25.808 by 0818 GMT.
    Poland's PMI, at 48.7, was also in the negative, but higher
than February's figure and forecasts. The zloty
drifted off Friday's three-week low of 4.3075. 
    The Hungarian index dropped to 52.4, the lowest since 2016.
The forint, which plunged last week after the Hungarian central
bank dropped its guidance on gradually tightening policy,
strengthened by 0.2 percent against the euro to trade at 321.1.
    "China is key, and we have seen great PMIs," said Ulrich
Leuchtmann, head of FX and emerging markets research at
Commerzbank. "So loose G10 central banks and less fear over a
global recession is a good backdrop for emerging markets, and
risky assets more widely."
    In equities markets, Warsaw led gains. Its blue-chip index
 rose 1.1 percent to a 10-day high.
    Romania's and Poland's central banks are expected to keep 
their interest rates on hold at their meetings on Tuesday and
Wednesday. 
    The leu led gains in the region, rising 0.3
percent to 4.765.
    Romania's government last week eliminated a link between a
new bank tax and the ROBOR interbank interest rates. BUt
the Romanian central bank is unlikely to use its regained
freedom to increase interest ratesm even though inflation has
been higher than expected, analysts said.
    "The NBR is likely to continue to use liquidity management,
and eventually, FX interventions, to deter the depreciation of
the Romanian leu - at least for a while," ING analysts said in a
note.
    Poland's March inflation figures released on Friday
surprised on the upside. Running at 1.7 percent, annual
inflation is still too low to trigger central bank action,
analysts said.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1018 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.8080   25.8190    +0.04%    -0.39%
 crown      >                                       
 Hungary    <EURHUF=  321.1000  321.5900    +0.15%    -0.00%
 forint     >                                       
 Polish     <EURPLN=    4.3011    4.3066    +0.13%    -0.27%
 zloty      >                                       
 Romanian   <EURRON=    4.7650    4.7798    +0.31%    -2.33%
 leu        >                                       
 Croatian   <EURHRK=    7.4280    7.4355    +0.10%    -0.24%
 kuna       >                                       
 Serbian    <EURRSD=  117.8300  117.9300    +0.08%    +0.40%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1081.24  1074.390    +0.64%    +9.60%
                                       0            
 Budapest             41850.97  41683.78    +0.40%    +6.93%
 Warsaw                2338.38   2312.09    +1.14%    +2.71%
 Bucharest             8116.18   8045.38    +0.88%    +9.92%
 Ljubljana  <.SBITOP    869.34    867.66    +0.19%    +8.09%
            >                                       
 Zagreb                1801.47   1797.81    +0.20%    +3.01%
 Belgrade   <.BELEX1    732.10    732.92    -0.11%    -3.88%
            5>                                      
 Sofia                  583.29    583.87    -0.10%    -1.88%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.7470   -0.1830   +235bps    -19bps
            R>                                      
   5-year   <CZ5YT=R    1.7970    0.0530   +226bps     +3bps
            R>                                      
   10-year  <CZ10YT=    1.8510    0.0150   +189bps     -1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6980   -0.0970   +230bps    -11bps
            R>                                      
   5-year   <PL5YT=R    2.2150    0.0110   +268bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.8400    0.0000   +288bps     -3bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.10      2.14      2.14      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.29      0.40      0.47      0.18
                                                    
 Poland                   1.72      1.72      1.72      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Karin Strocheckr in London, editing by
Larry King)
  
 
 
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