June 2, 2020 / 10:26 AM / a month ago

CEE MARKETS-Currencies strengthen on economic recovery hopes

    WARSAW, June 2 (Reuters) - Central European currencies rose
on Tuesday, continuing a strong run supported by increased
risk-appetite in global markets as investors bet that the worst
of the economic pain caused by the coronavirus crisis may have
passed.
    More and more countries are taking steps to ease their
lockdowns and many economists believe the global economy will
start to recover after a big hit in the second quarter.
    "It was a very bad second quarter but I think the belief in
the market is that it was related mainly the start of the second
quarter, to April and from May onwards there should be some
gradual improvement," said Radomir Jac, chief economist for
Generali Investments CEE.
    At 0940 GMT the Czech Crown was 0.56% firmer
against the euro at 26.596, its strongest since March 16, when
it suffered its heaviest losses in the coronavirus outbreak. 
The Hungarian forint strengthened 0.14% to 344.40.
    The Polish zloty was 0.44% stronger at 4.3837, breaking
through a 4.40 support level just over a week after it crossed
4.50.
    "Recently the zloty is sort of strong ignoring all the
negative economic data or the NBP lowering rates," said a
Warsaw-based currency trader.
    The Romanian Leu was little changed at 4.8415.
    Romania faces a rating review from S&P later this week, and
some analysts said it could see a downgrade which would put it
below investment grade. 
    A 40% pension increase approved by the country's previous
leftist cabinet had put pressure on ratings and financial assets
even before the new coronavirus pandemic. On Monday, Prime
Minister Ludovic Orban said that while his centrist minority
government will raise pensions this year, it will not be by 40%.

    The region's main stock indices were up 0.1-0.9% as
investors focused on brightening economic prospects.
    Benchmark Polish 10-year yields rose more than 3
basis points to 1.279%, continuing to increase after plummeting
on Thursday following Poland's surprise rate cut. 
    Czech 10-year yields fell more than 4 basis
points to 0.754%.
     Hungary's central bank will not buy any government bonds
from local banks this week, it said on Tuesday, scrapping its
weekly tender for the first time since launching the purchases
last month.
    
    
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1140              
                                     CET               
                                                              
                   CURRENC                                    
                   IES                                 
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  26.5960  26.7450   +0.56%   -4.38%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  344.400  344.875   +0.14%   -3.85%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.3837   4.4032   +0.44%   -2.90%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.8415   4.8405   -0.02%   -1.10%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.5875   7.5885   +0.01%   -1.87%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.570  117.600   +0.03%   +0.00%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                   STOCKS                                     
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2020
 .PX     Prague              911.46  907.620   +0.42%  -18.30%
                                           0           
 .BUX    Budapest           36180.7  35875.7   +0.85%  -21.49%
                                  8        1           
 .WIG20  Warsaw    <.WIG20  1735.12  1733.52   +0.09%  -19.30%
                   >                                   
 .BETI   Buchares           8767.03  8701.29   +0.76%  -12.13%
         t                                             
 .SBITO  Ljubljan  <.SBITO   841.32   835.49   +0.70%   -9.13%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1652.59  1636.51   +0.98%  -18.08%
                   >                                   
 .BELEX  Belgrade  <.BELEX   674.70   672.05   +0.39%  -15.84%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   459.65   461.06   -0.31%  -19.10%
                   >                                   
                                                              
                   BONDS                                      
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   0.2900   0.1890   +094bp   +19bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   0.3710  -0.0350   +098bp    -4bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   0.7540  -0.0470   +116bp    -4bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   0.2480   0.0110   +090bp    +1bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   0.8230   0.0950   +143bp    +9bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.2790   0.0360   +168bp    +4bps
 =RR     10-year   =RR>                             s  
                                                              
                   FRA                                        
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     0.25     0.26     0.28     0.34
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.78     0.72     0.67     0.91
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     0.26     0.26     0.27     0.28
                   ><WIBOR                             
                   =>                                  
         Note: FRA quotes are for                             
         ask prices                                    
         ********************************************         
         ******************                            
                                                              
 

    

 (Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague,
Anita Komuves in Budapest and Luiza Ilie in Bucharest. Editing
by Jane Merriman)
  
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