November 7, 2019 / 11:25 AM / 13 days ago

CEE MARKETS-Crown holds gains into rate meeting, stocks up

    PRAGUE, Nov 7 (Reuters) - The Czech crown held onto gains on
Thursday as the country's central bank met and was likely to
hold fire on interest rates despite a continuing debate over a
possible hike, while stock markets in the region were boosted by
better global sentiment.
    The crown was near its strongest levels in four months but
stuck to the weak side of the psychological 25.50 per euro
barrier, with analysts expecting stable rates.
    The Czech central bank is one of the few in Europe still
debating a rate hike even as the European Central Bank and U.S.
Federal Reserve have already starting easing policy to safeguard
their economies.
    Central Europe's economies have maintained solid growth
despite a slowdown in key euro zone trading partners like
Germany, boosted by strong domestic demand that is allowing rate
setters to hold off on joining the rush to loosen policy.
    Poland's central bank governor said on Wednesday he expected
stable interest rates until his term ends in 2022 as the bank's
policy council left borrowing costs unchanged.
    Romania also held fire as policymakers balance inflation at
the upper end of the target and a potential firming of the leu
currency should they raise interest rates.
    The Czechs are also balancing inflation above its midpoint
target with high uncertainty from external risks like global
trade wars and Britain's departure from the EU.
    "As nothing is acutely pushing the bank to raise rates
quickly, rates can stay unchanged this time," CSOB said.
    Markets and analysts see chances of rate stability into next
year but are split on the direction after that. Rates markets in
recent weeks have priced out some chances of a cut over the next
year.
    The crown and Polish zloty both edged up
less than 0.1% to 25.506 and 4.264 respectively to the euro in
morning trade. The Romanian leu was steady at 4.761
and Hungary's forint dropped 0.2%.
    A Reuters poll on Thursday showed analysts see currencies in
the region mostly flat to weaker over the next year.

    "(The zloty) stabilised, but in our view a correction after
the recent appreciation... is still more probable than a return
to (firming)," Santander said in a note.
    Stock markets fared better, gaining up to half a percent as
China signalled a 'phase 1' trade deal with the United States
was close to being sealed.
    
 
                       CEE MARKETS        SNAPSHOT     AT  1132                    
                                                      CET                 
                                          CURRENCIES                               
                                          Latest      Previous   Daily    Change
                                          bid         close      change   in 2019
 EURCZK=    Czech                            25.5060    25.5130   +0.03%     +0.79%
            crown                                                         
 EURHUF=    Hungary                         332.6000   331.9000   -0.21%     -3.46%
            forint                                                        
 EURPLN=    Polish                            4.2640     4.2660   +0.05%     +0.60%
            zloty                                                         
 EURRON=    Romanian                          4.7605     4.7612   +0.01%     -2.24%
            leu                                                           
 EURHRK=    Croatian                          7.4310     7.4355   +0.06%     -0.28%
            kuna                                                          
 EURRSD=    Serbian                         117.3000   117.4100   +0.09%     +0.85%
            dinar                                                         
            Note:      calculated from                           1800              
            daily                                                CET      
            change                                                        
                                                                                   
                                          Latest      Previous   Daily    Change
                                                      close      change   in 2019
 .PX        Prague                           1076.76  1073.7800   +0.28%     +9.14%
 .BUX       Budapest                        43466.27   43291.61   +0.40%    +11.06%
 .WIG20     Warsaw                           2268.81    2255.34   +0.60%     -0.34%
 .BETI      Bucharest                        9682.84    9687.66   -0.05%    +31.14%
 .SBITOP    Ljubljana                         861.90     864.90   -0.35%     +7.17%
 .CRBEX     Zagreb                           1973.79    1976.64   -0.14%    +12.86%
 .BELEX15   Belgrade                          748.75     750.15   -0.19%     -1.70%
 .SOFIX     Sofia                             557.87     557.83   +0.01%     -6.16%
                                          BONDS                                    
                                          Yield       Yield      Spread   Daily
                                          (bid)       change     vs Bund  change in
            Czech                                                         spread
            Republic                                                      
 CZ2YT=RR     2-year                          1.2540     0.0100   +187bp      -1bps
                                                                       s  
 CZ5YT=RR     5-year                          1.1160    -0.0150   +169bp      -4bps
                                                                       s  
 CZ10YT=RR    10-year                         1.5070     0.0820   +181bp      +6bps
                                                                       s  
            Poland                                                                 
 PL2YT=RR     2-year                          1.3890    -0.0190   +201bp      -4bps
                                                                       s  
 PL5YT=RR     5-year                          1.7720     0.0100   +234bp      -2bps
                                                                       s  
 PL10YT=RR    10-year                         2.0430     0.0100   +234bp      -2bps
                                                                       s  
                       FORWARD            RATE        AGREEMENT                    
                                          3x6         6x9        9x12     3M
                                                                          interbank
            Czech Rep                           2.23       2.22     2.16       2.18
            Hungary                             0.27       0.33     0.37       0.19
            Poland                              1.73       1.71     1.69       1.71
            Note: FRA  are for ask prices                                          
            quotes                                                        
 
   
    
    
    
     

 (Reporting by Jason Hovet in Prague and Alicja Ptak; Editing by
Kirsten Donovan)
  
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