March 17, 2020 / 10:16 AM / in 23 days

CEE MARKETS-Currencies slip, investors eye potential Polish rate cut

    WARSAW, March 17 (Reuters) - Central European currencies
were under pressure on Tuesday as investors digested a raft of
measures from the region's central banks to shore up economies
rocked by coronavirus and attention turned to a potential rate
cut in Poland.
    Poland's Monetary Policy Council (MPC) will hold a regular,
non-policy monthly meeting on Tuesday with some analysts
expecting it to cut rates in an emergency move to support the
coronavirus-hit economy.
    "There is some panic selling on emerging markets and the
zloty's getting hit," said a Warsaw-based currency dealer.
    "The market's pricing in cuts from NBP today... so there is
no reason to hold zloty."
    At 0931 GMT the Polish zloty was down 0.86%
against the euro at 4.4790.
    The Hungarian forint hit yet another record low,
falling 0.86% to 346.33, while the Romanian leu fell
0.05% to 4.843. The Czech crown made back some of the
previous day's losses to be bid up 0.18% at 27.245.
    On Monday the region's central banks moved to support the
economy and ensure liquidity in markets. 
    The Czech central bank delivered a surprise 50 basis point
rate cut on Monday, while the Polish central bank's management
board said it was starting large-scale purchases of treasury
bonds on the secondary market.
    Hungary's central bank announced emergency steps on Monday,
widening the range of collateral it accepts from banks and
urging lenders to apply a loan repayment moratorium for stricken
firms.
    The region's stocks were also mostly in negative territory,
with Prague's PX index down 2.51% after having risen in
early trade, and Hungary's main index falling 5.22%. In
Warsaw, the WIG 20 , which has fallen over 20% this
month, made back some losses and rose 2.71%.
    Hungarian government bond yields jumped on Monday, with the
yield on the 10-year bond rising 46 basis points to 3.26% and
the five-year yield surging 37 basis points to 2.27% according
to the fixings of debt agency AKK.
    "We see some consolidation today, bond yields dropped 10-20
bps," an FI trader in Budapest said.
    "Last Thursday we saw a 90bps jump in bond yields.
Yesterday's jump of 60bps was mild compared to that," he added.
"The jump last week was due to the panic in the markets. It was
similar to 2012 when anything that was not cash or a dollar bond
was off limits."
    Benchmark Polish 10-year yields fell 8 basis
points to 2.197% after increasing sharply in the previous two
sessions.
    Czech 10-year yields were stable at 1.104%.    
    
            CEE        SNAPSHOT   AT                         
            MARKETS              1031 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2020
 Czech                  27.2450   27.2950    +0.18%    -6.65%
 crown                                               
 Hungary               346.3300  343.3600    -0.86%    -4.38%
 forint                                              
 Polish                  4.4790    4.4407    -0.86%    -4.97%
 zloty                                               
 Romanian                4.8430    4.8407    -0.05%    -1.13%
 leu                                                 
 Croatian                7.5790    7.5797    +0.01%    -1.76%
 kuna                                                
 Serbian               117.6100  117.6850    +0.06%    -0.03%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2020
 Prague                  742.02  761.1200    -2.51%   -33.49%
 Budapest              30616.59  32304.48    -5.22%   -33.56%
 Warsaw                 1377.84   1341.54    +2.71%   -35.92%
 Bucharest              7117.25   7126.73    -0.13%   -28.67%
 Ljubljana               735.97    725.41    +1.46%   -20.51%
 Zagreb                 1416.99   1405.52    +0.82%   -29.76%
 Belgrade   <.BELEX15    690.66    697.77    -1.02%   -13.85%
            >                                        
 Sofia                   420.55    423.96    -0.80%   -25.98%
                                                             
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.9520    0.0000   +281bps     -2bps
            >                                        
   5-year   <CZ5YT=RR    1.6870    0.0100   +237bps     +1bps
            >                                        
   10-year  <CZ10YT=R    1.1040    0.0000   +153bps     -3bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.2300    0.0130   +209bps     -1bps
            >                                        
   5-year   <PL5YT=RR    1.7500   -0.1490   +243bps    -15bps
            >                                        
   10-year  <PL10YT=R    2.1190   -0.1580   +254bps    -19bps
            R>                                       
            FORWARD                                          
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      1.44      0.86      0.56      2.31
            PRIBOR=>                                 
 Hungary            <      0.60      0.60      0.63      0.67
            BUBOR=>                                  
 Poland             <      1.02      0.90      0.78      1.60
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 **************************************************          
 ************                                        
 
 (Reporting by Alan Charlish in Warsaw, Anita Komuves and
Krisztina Than in Budapest, Jason Hovet in Prague;
Editing by Andrew Cawthorne)
  
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