October 15, 2019 / 11:17 AM / a month ago

CEE MARKETS-Forint and zloty down, crown unmoved by central bank comments

    PRAGUE, Oct 15 (Reuters) - Hungary's forint was the biggest
faller in central Europe on Tuesday while the Polish zloty
pulled back from an 11-week high as uncertainty over a possible
Brexit deal and U.S.-China trade talks kept investors cautious.
    The zloty was down a touch after Poland's headline inflation
rate last month was confirmed at 2.6%, lending further weight to
the view that the central bank would be unlikely to cut rates
even as global policymakers turn to easing measures.
    Central European policymakers are caught between solid
domestic economies where low unemployment and rising wages are
fuelling growth and inflation and weakness in major euro zone
economies such a Germany, which is flirting with recession.
    Faced with a mixed backdrop, central banks in the region
have left interest rates on hold for now and, in the case of the
Czech Republic, are even debating whether tighter monetary
policy is needed.
    The zloty was down 0.1% at 4.298 against the euro
at 1047 GMT and the forint lost 0.2% to 332.40.
    "(The Polish) MPC is aware that global central banks are
lowering their rates, (so it) is not the best situation to
increase interest rates," Piotr Bielski, head of research at
Santander, said after the inflation report.
    "But there is also no atmosphere for interest rate cuts,
neither for rate hikes, so stabilization of monetary policy will
be maintained," he said.
    Markets were watching whether Britain could move closer on
Tuesday to clinching a deal to leave the European Union. Hopes
were also slightly dimmer for a trade deal between the United
States and China, the world's two biggest economies.
    "It's uncertainty all around," a trader in Budapest said.
    The Czech crown was a touch higher at 25.81 per euro but was
unmoved by comments from rate setter Vojtech Benda who said he
still saw room for tighter policy. He was one of two central
bank board members who backed a rate rise at a September meeting
when the bank ultimately voted to leave rates on hold.
    Benda's comments were tempered by another bank board member,
Tomas Holub, who said continued signs of a dampening external
growth outlook may spill over into the Czech economy.
    The crown was seen remaining in tight ranges although some
analysts said it could weaken to 26 by the end of the year. For
now, it is hugging the 25.80 per euro level.
    "When it goes lower, it is buy euro and when it goes higher
it is sell," one trader said.
                                CEE MARKETS        SNAPSHOT    AT                        
                                                                 1247 CET                
                                                   Latest      Previous        Daily     Change
                                                   bid         close           change    in 2019
 EURCZK=    Czech crown                            25.8100     25.8285         +0.07%    -0.40%
 EURHUF=    Hungary forint                         332.4000    331.7000        -0.21%    -3.40%
 EURPLN=    Polish zloty                           4.2975      4.2934          -0.10%    -0.18%
 EURRON=    Romanian leu                           4.7535      4.7532          -0.01%    -2.09%
 EURHRK=    Croatian kuna                          7.4340      7.4303          -0.05%    -0.32%
 EURRSD=    Serbian dinar                          117.3500    117.4200        +0.06%    +0.81%
            Note: daily change  calculated from                                1800 CET  
                                                   Latest      Previous        Daily     Change
                                                               close           change    in 2019
 .PX        Prague                                 1015.87     1019.5200       -0.36%    +2.97%
 .BUX       Budapest                               40588.00    40733.70        -0.36%    +3.70%
 .WIG20     Warsaw                                 2152.53     2148.53         +0.19%    -5.45%
 .BETI      Bucharest                              9538.67     9517.82         +0.22%    +29.19%
 .SBITOP    Ljubljana                              873.41      872.15          +0.14%    +8.60%
 .CRBEX     Zagreb                                 1995.15     1986.31         +0.45%    +14.09%
 .BELEX15   Belgrade                               743.03      745.78          -0.37%    -2.45%
 .SOFIX     Sofia                                  560.88      561.77          -0.16%    -5.65%
                                                   Yield       Yield           Spread    Daily
                                                   (bid)       change          vs Bund   change in
            Czech Republic                                                               spread
 CZ2YT=RR   2-year                                 1.2690      -0.0030         +196bps   -1bps
 CZ5YT=RR   5-year                                 1.0390      0.0140          +174bps   +1bps
 CZ10YT=RR  10-year                                1.2900      -0.0130         +176bps   +0bps
 PL2YT=RR   2-year                                 1.5080      -0.0070         +220bps   -2bps
 PL5YT=RR   5-year                                 1.7360      -0.0180         +244bps   -3bps
 PL10YT=RR  10-year                                1.9580      -0.0330         +242bps   -2bps
                                FORWARD            RATE        AGREEMENT                 
                                                   3x6         6x9             9x12      3M interbank
            Czech Rep                              2.26        2.23            2.15      2.17
            Hungary                                0.26        0.31            0.34      0.21
            Poland                                 1.73        1.70            1.67      1.71
            Note: FRA quotes    are for ask prices                                       

 (Reporting by Jason Hovet in Prague; editing by David Clarke)
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