October 17, 2019 / 9:55 AM / a month ago

CEE MARKETS-Currencies, stocks rally on Brexit deal

    BUDAPEST, Oct 17 (Reuters) - Central European currencies and
stocks rallied on Thursday, with the Hungarian forint jumping
almost half a percent on news of a Brexit deal which boosted
sentiment and allayed concerns about an unruly divorce.
    "There is a currency rally on the Brexit news, the forint
has jumped while yields are rising," a Hungarian dealer said.  
    The forint reversed its earlier losses and was 0.2%
higher at 0945 GMT, and other currencies also firmed. Stocks
rallied, with the Prague bourse's main index rising over 1%.
    Prime Minister Boris Johnson said that Britain and the
European Union had agreed a "great" new Brexit deal and urged
lawmakers to approve it at the weekend.
    The forint had underperformed its regional peers earlier on
Thursday after a Hungarian central banker said "persistently"
low interest rates were the new normal.
    "Yesterday the comments by (Vice Governor) Marton Nagy moved
the forint, as he basically implied that tightening would be
nowhere in sight in the longer term," a dealer said.
    The forint has weakened 3.4% so far this year, being the
worst performer in the region.
    On Wednesday, National Bank of Hungary Deputy Governor Nagy
said persistently low interest rates were here to stay as global
inflation rates are unlikely to return to their previous higher
levels in the coming years.
    Central Europe's most dovish central bank holds a rate
meeting next Tuesday where it is expected to keep all interest
rates on hold. Its overnight deposit rate is in negative
territory at -0.05%.
    In Prague, two Czech rate-setters spoke in favour of
tightening interest rates earlier this week.
    Monetary policy loosening by global central banks has put
Central Europe's central bankers into a comfortable position.
Economic growth in the region remains strong but risks from a
euro zone slowdown are looming.
    "The outlook for the Czech economy remains one of solid
domestic fundamentals while the worsening of the external
environment creates significant downside risks ahead," Morgan
Stanley analysts said in a note.
    
            CEE        SNAPSHOT   AT                         
            MARKETS              1143 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.6930   25.7480    +0.21%    +0.05%
 crown                                               
 Hungary               331.8400  332.4900    +0.20%    -3.24%
 forint                                              
 Polish                  4.2812    4.2850    +0.09%    +0.20%
 zloty                                               
 Romanian                4.7550    4.7535    -0.03%    -2.12%
 leu                                                 
 Croatian                7.4380    7.4333    -0.06%    -0.38%
 kuna                                                
 Serbian               117.4700  117.5500    +0.07%    +0.71%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1038.30  1026.980    +1.10%    +5.24%
                                        0            
 Budapest              40712.73  40404.66    +0.76%    +4.02%
 Warsaw                 2164.12   2156.06    +0.37%    -4.94%
 Bucharest              9519.96   9510.94    +0.09%   +28.93%
 Ljubljana               873.22    870.87    +0.27%    +8.57%
 Zagreb                 2010.55   1997.62    +0.65%   +14.97%
 Belgrade   <.BELEX15    747.32    745.22    +0.28%    -1.89%
            >                                        
 Sofia                   561.38    560.07    +0.23%    -5.56%
                       BONDS                                 
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.3250    0.0550   +197bps     +4bps
            >                                        
   5-year   <CZ5YT=RR    1.0810   -0.0720   +170bps    -11bps
            >                                        
   10-year  <CZ10YT=R    1.4750    0.0390   +182bps     -1bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.5310    0.0040   +218bps     -1bps
            >                                        
   5-year   <PL5YT=RR    1.8080    0.0360   +243bps     +0bps
            >                                        
   10-year  <PL10YT=R    2.0780    0.0730   +242bps     +3bps
            R>                                       
            FORWARD    RATE      AGREEMEN                    
                                 T                   
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      2.02      2.20      2.23      2.18
            PRIBOR=>                                 
 Hungary            <      0.28      0.32      0.37      0.21
            BUBOR=>                                  
 Poland             <      1.73      1.70      1.68      1.71
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 **************************************************          
 ************                                        
 


 (Reporting by Krisztina Than in Budapest, Editing by William
Maclean)
  
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