December 27, 2017 / 11:07 AM / 2 months ago

CEE MARKETS-Christmas demand helps to lift zloty and forint

    * Zloty, forint at strongest level vs euro this month
    * Regional currencies supported by Christmas demand
    * Leu eases as government spending boosts supply
    * Czech crown little changed despite improved business
sentiment

    By Sandor Peto
    BUDAPEST, Dec 27 (Reuters) - Central European currencies
mostly traded firmer or steady on Wednesday, buoyed by demand
from millions of eastern europeans earning euros or sterling in
other states and by robust economic growth in the region.
    Many of the workers who live abroad transfer foreign
currency home around Christmas, or visit home and spend money
earned abroad. 
    The forint and the zloty traded at this
month's strongest levels against the euro, gaining 0.2 percent
by 0953 GMT.
    "Christmas spending by those who visited home (from Western
countries) can be enough to buoy (regional currencies), while
year-end market liquidity is low," one Budapest-based currency
dealer said. 
    The leu, however, eased by 0.2 percent, touching
its weakest since late November at 4.6469 versus the euro.
    It weakened in a thin market after the Romanian government
boosted its leu spending in the last weeks of the year.
    The Romanian central bank also holds a one-week repo tender
on Wednesday to provide banks with leu liquidity if needed. 
    Romanian lawmakers proposed a bill on Tuesday to change the
criminal code and decriminalise several graft offences.
    If approved, the change would put an end to an ongoing trial
of Liviu Dragnea, head of the ruling Social Democrat Party, who
is accused of abuse of office.
    Parliament will reconvene in February to discuss the
proposal.
    Investors have been worried by judicial reforms in Bucharest
and Warsaw, which critics say damage the independence of courts,
but those concerns were largely overshadowed by encouraging
economic data.
    Markets also shrugged off the threat of EU sanctions because
 Hungary would be likely to veto the ultimate sanction of
suspending Poland's voting rights in the bloc.
    In the string of robust figures from the region, the Czech
Republic on Wednesday reported a rise in business confidence in
December.
    Prague's main equities index touched its highest level
in more than six years, rising by nearly 0.4 percent, mainly
driven by gains for Austrian-based bank Erste.
    The crown held steady against the euro.
    Along with the zloty, the crown is one of the world's
top-performing currencies this year. Both have gained about 5
percent since 2016.
    Expectations for Czech central bank (CNB) interest rate
tightening have been the key influence on the crown in recent 
months.
    The CNB, after two increases since August, kept rates on
hold last week, disappointing some holders of long crown
positions, though it is expected to continue to increase
interest rates next year.
    
               CEE MARKETS  SNAPSH   AT  1053 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.799  25.794  -0.02%   4.68%
                                 0       5          
 Hungary                    311.20  311.90   +0.22  -0.76%
 forint                         00      00       %  
 Polish zloty               4.1904  4.1978   +0.18   5.09%
                                                 %  
 Romanian leu               4.6465  4.6393  -0.15%  -2.40%
 Croatian                   7.5340  7.5446   +0.14   0.28%
 kuna                                            %  
 Serbian                    118.55  118.32  -0.19%   4.05%
 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                     1084.7  1081.2   +0.33   +17.7
                                 2       0       %      0%
 Budapest                   39055.  39027.   +0.07   +22.0
                                65      55       %      4%
 Warsaw                     2459.6  2445.6   +0.57   +26.2
                                 5       5       %      7%
 Bucharest                  7777.0  7796.5  -0.25%   +9.77
                                 0       2               %
 Ljubljana                  789.64  795.56  -0.74%   +10.0
                                                        4%
 Zagreb                     1827.5  1834.3  -0.37%  -8.39%
                                 3       9          
 Belgrade                   746.66  740.70   +0.80   +4.08
                                                 %       %
 Sofia                      671.84  665.76   +0.91   +14.5
                                                 %      6%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.684  -0.181   +131b  -20bps
                                                ps  
   5-year                    0.786   0.079   +100b   +8bps
                                                ps  
   10-year                   1.429       0   +102b   +1bps
                                                ps  
 Poland                                                   
   2-year                    1.707  -0.009   +234b   -2bps
                                                ps  
   5-year                     2.62  -0.004   +283b   -1bps
                                                ps  
   10-year                   3.313  -0.028   +290b   -2bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.01    1.22    1.34       0
               IBOR=>                               
 Hungary               <BU    0.08    0.13    0.19    0.03
               BOR=>                                
 Poland                <WI    1.76    1.81    1.91    1.72
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Radu Marinas in Bucharest/Bartosz
Chmielewski and Marcin Goclowski in Warsaw; Editing by David
Goodman)
  
 
 
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