August 17, 2018 / 9:59 AM / a month ago

CEE MARKETS-Currencies edge up cautiously, eyes still fixed on Turkey

    * Forint, leu lead cautious gains as lira, euro firm
    * S&P may upgrade Hungary late on Friday, but bonds are flat
    * Czech central banker Hampl vows to vote on rate hike in
Sept
    * Hungarian central banker: debt fall has cut vulnerability

    By Sandor Peto
    BUDAPEST, Aug 17 (Reuters) - Central European currencies
firmed slightly on Friday as the Turkish lira, whose plunge sent
jitters across emerging markets earlier this week, regained some
more ground.
    The forint and the leu firmed 0.2
percent versus the euro by 0840 GMT, and the zloty gained 0.1
percent to a whisker off the 4.3 line - modest gains as traders
fretted about the risk of further contagion from Turkey.
    The Czech crown was flat at 25.71 versus the euro.
    It failed to benefit from comments from Czech National Bank
(CNB) Vice-Governor Mojmir Hampl, who said he would vote for
another interest rate hike at the next monetary policy meeting
on Sept. 26.
    Hungarian government bonds moved sideways despite some
expectations that Standard & Poor's may upgrade the country's
sovereign debt rating by one notch from 'BBB-'.
    "The rating is already in investment grade, so an upgrade
would not be a game-changer," one Budapest-based fixed income
trader said. 
    Investors were also unwilling to open long positions ahead
of a three-day weekend in Hungary, ending with Monday's national
holiday, and following holidays in Turkey, the trader added.
    The zloty is not expected to breach the 4.29 level against
the euro for a long time despite increased risk appetite, as
uncertainty remains over Turkey, BZ WBK analysts said in a note.
    Polish data released on Friday showed 7.2 percent annual
rise in corporate sector wages in July.
    The figure was below analysts' 7.5 percent forecast, but
wage growth could pick up in the next months and further fuel a
rise in consumption, BZ WBK said.
    A surge in wages has caused some inflation concerns across
Central Europe, but has not led to worries over trade and
current accounts seen in other emerging economies, including
Turkey.
    Hungarian central bank Deputy Governor Marton Nagy
criticised some analysts and major papers on Friday, who in his
view do not properly differentiate between the fundamentals of
emerging economies during the Turkish market turmoil.
    He said on the bank's website that Hungary's current account
surpluses significantly improved the country's debt profile in
the past years, unlike a rise in debt in other emerging
economies.
    Regional equities markets were mixed on Friday, with
Warsaw's blue-chip index shedding one percent, while
Bucharest firmed 0.4 percent.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1040 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.7100   25.7100    +0.00%    -0.65%
 crown      >                                       
 Hungary    <EURHUF=  323.1000  323.7800    +0.21%    -3.77%
 forint     >                                       
 Polish     <EURPLN=    4.3005    4.3040    +0.08%    -2.89%
 zloty      >                                       
 Romanian   <EURRON=    4.6545    4.6621    +0.16%    +0.54%
 leu        >                                       
 Croatian   <EURHRK=    7.4200    7.4245    +0.06%    +0.14%
 kuna       >                                       
 Serbian    <EURRSD=  117.8900  118.0200    +0.11%    +0.52%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1062.21  1061.380    +0.08%    -1.48%
                                       0            
 Budapest             36454.79  36472.99    -0.05%    -7.42%
 Warsaw                2240.18   2262.10    -0.97%    -8.98%
 Bucharest             8158.35   8127.85    +0.38%    +5.22%
 Ljubljana  <.SBITOP    873.86    877.01    -0.36%    +8.37%
            >                                       
 Zagreb                1824.09   1820.63    +0.19%    -1.02%
 Belgrade   <.BELEX1    731.37    733.33    -0.27%    -3.74%
            5>                                      
 Sofia                  631.11    633.62    -0.40%    -6.84%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.2500    0.0260   +187bps     +3bps
            R>                                      
   5-year   <CZ5YT=R    1.6610    0.0050   +198bps     +1bps
            R>                                      
   10-year  <CZ10YT=    2.1880    0.0270   +188bps     +4bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6290    0.0180   +225bps     +2bps
            R>                                      
   5-year   <PL5YT=R    2.5080    0.0070   +283bps     +2bps
            R>                                      
   10-year  <PL10YT=    3.1860    0.0290   +288bps     +4bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                1.71      1.84      1.94      1.46
            <PRIBOR=                                
            >                                       
 Hungary                  0.52      0.74      0.96      0.19
                                                    
 Poland                   1.74      1.76      1.81      1.70
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Radu Marinas in Bucharest
Editing by Andrew Heavens)
  
 
 
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