March 26, 2020 / 2:05 PM / 13 days ago

CEE MARKETS-Czech crown extends losses after sharp rate cut, other assets mixed

 (Updates markets, adds Czech rates and bond tender)
    BUCHAREST, March 26 (Reuters) - The Czech crown extended
losses after the central bank cut interest rates more than
expected on Thursday while the country's finance ministry sold
huge amounts in debt tenders for a second day as it ramps up
borrowing amid the coronavirus outbreak.
    Other currencies and stocks across the region were mixed,
with investors caught between fears of a global recession and
hopes of stimulus measures.
    The Czech National Bank cut its main interest rate by 75
basis points, following a surprise cut it delivered last week.

    The Czech, Polish and Romanian central banks have cut their
benchmark rates and announced further measures to shore up
economic activity damaged by restrictions and closures aimed at
curbing the coronavirus outbreak.
    A wide majority of analysts polled by Reuters had expected
Czech policymakers to cut rates by half a percentage point.

    "As the impact of the coronavirus crisis on economic
activity becomes clearer, we expect the central bank to deliver
another 50bp rate cut to near-zero over the coming months and
possibly commence sovereign bond purchases," Capital Economics
said in a statement.
    By 1330 GMT, the Czech crown extended losses to
trade 0.4% lower against the euro at 27.5850. 
    Analysts see a chance that the central bank could be active
in the secondary debt market after legislation widening the
assets it can buy - currently limited to maturities of up to one
year - goes through parliament next month.
    On Thursday, the Czech finance ministry sold a massive 68.56
billion crowns ($2.74 billion) in 52-week Treasury bills,
meeting most demand for the short-term paper a day after seeing
record bids at an auction for state bonds. 
    "People are looking to offload cash in anticipation of (the
central bank) easing during the year," a trader said in
reference to the T-bill result.
    Elsewhere in the region, the Hungarian forint was
down 0.3% against the euro at 355.0500. 
    Hungary may have to raise its budget deficit target this
year as the government revises its 2020 budget to cope with the
coronavirus outbreak, finance minister Mihaly Varga said on
Thursday.
    Hungary has kept is budget deficit well below the European
Union's limit - 3% of gross domestic product - in recent years
as Viktor Orban's government worked to wrestle down some of the
largest debt in central Europe.
    "The 2020 Hungarian budget has substantial reserves, so we
have resources to tap now as trouble has reared its head," 
Varga said in a post on his Facebook page on Thursday.
    "However, if this is not enough, sticking staunchly to a
deficit below 3% would be a mistake."
    The Monetary Council left interest rates on hold on Tuesday
and moved to pump more money into the banking system by
introducing a massive fixed-rate collateralised loan instrument.

    It provided 43.1 billion forints ($132.06 million) worth of
funds to banks at its first collateralised loan tender on
Wednesday, offering liquidity to banks at a fixed rate of 0.9%,
it said.
    Romania, too, was likely to raise its deficit target at a
budget revision in April, its finance minister said, but unlike
its Hungarian neighbour, Bucharest is already running a deficit
above EU limits, leaving it more vulnerable to investor flight.
    On Thursday, the ministry said it plans to tap foreign
markets for further issues worth 10 billion euros ($10.9
billion) by 2022.
    The Romanian leu was flat against the euro, while
the Polish zloty reversed course to trade 0.2% higher
versus the euro at 4.5650.
    The Polish central bank bought back treasury bonds worth
over 10 billion zlotys ($2.41 billion) at its third buyback
operation.
    Prague's bluechip index fell 1.0% on the day, while
Bucharest's was flat and Hungary and Poland's
 rose 0.7% and 1.0%, respectively.    
    
            CEE       SNAPSHO   AT                      
            MARKETS   T        1404              
                               CET               
                      CURRENC                           
                      IES                        
                      Latest   Previou  Daily    Change
                               s                 
                      bid      close    change   in 2020
 Czech      <EURCZK=  27.5850  27.4690   -0.42%   -7.80%
 crown      >                                    
 Hungary    <EURHUF=  355.050  353.920   -0.32%   -6.73%
 forint     >               0        0           
 Polish     <EURPLN=   4.5650   4.5726   +0.17%   -6.76%
 zloty      >                                    
 Romanian   <EURRON=   4.8330   4.8350   +0.04%   -0.92%
 leu        >                                    
 Croatian   <EURHRK=   7.6095   7.6119   +0.03%   -2.16%
 kuna       >                                    
 Serbian    <EURRSD=  117.400  117.460   +0.05%   +0.14%
 dinar      >               0        0           
 Note:      calculated from             1800            
 daily                                  CET      
 change                                          
                                                        
                      Latest   Previou  Daily    Change
                               s                 
                               close    change   in 2020
 Prague                798.64  807.650   -1.12%  -28.41%
                                     0           
 Budapest             32952.2  32690.4   +0.80%  -28.49%
                            2        5           
 Warsaw               1456.09  1441.83   +0.99%  -32.28%
 Bucharest            7615.45  7621.00   -0.07%  -23.67%
 Ljubljana  <.SBITOP   725.27   727.51   -0.31%  -21.67%
            >                                    
 Zagreb               1428.83  1423.61   +0.37%  -29.18%
 Belgrade   <.BELEX1   638.63   629.80   +1.40%  -20.34%
            5>                                   
 Sofia                 421.29   426.13   -1.14%  -25.85%
                                                        
                      Yield    Yield    Spread   Daily
                      (bid)    change   vs Bund  change
                                                 in
 Czech                                           spread
 Republic                                        
   2-year   <CZ2YT=R   1.0580  -0.1640   +167bp   -15bps
            R>                                s  
   5-year   <CZ5YT=R   1.4620   0.0230   +199bp    +8bps
            R>                                s  
   10-year  <CZ10YT=   1.7910   0.1730   +213bp   +22bps
            RR>                               s  
 Poland                                                 
   2-year   <PL2YT=R   0.9130  -0.0620   +153bp    -5bps
            R>                                s  
   5-year   <PL5YT=R   1.2620  -0.0540   +179bp    +0bps
            R>                                s  
   10-year  <PL10YT=   1.7750  -0.0730   +212bp    -2bps
            RR>                               s  
            FORWARD                                     
                      3x6      6x9      9x12     3M
                                                 interba
                                                 nk
 Czech Rep               0.62     0.47     0.41     1.72
            <PRIBOR=                             
            >                                    
 Hungary                 0.33     0.35     0.35     0.47
                                                 
 Poland                  0.68     0.51     0.48     1.17
                                                 
 Note: FRA  are for ask                                 
 quotes     prices                               
 **********************************************         
 ****************                                
 

($1 = 4.1526 zlotys)

 (Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,
Alan Charlish in Warsaw and Anita Komuves in Budapest; editing
by Larry King and Susan Fenton)
  
 
 
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below