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CEE MARKETS-Forint eases, central bank seen pushing for weakening
August 22, 2017 / 9:58 AM / a month ago

CEE MARKETS-Forint eases, central bank seen pushing for weakening

    * Forint eases, but stays near strongest level since May
2015
    * Hungarian central bank seen keeping interest rates on hold
    * CEE bonds rangebound, equities mostly rise

    By Sandor Peto
    BUDAPEST, Aug 22 (Reuters) - The forint touched its weakest
levels this week against the euro on Tuesday before a central
bank rate meeting which some market players expect to call for a
weaker currency.
    While most Central European currencies remained rangebound,
the forint eased 0.2 percent versus the single
currency, to trade at 303.85 at 0837 GMT, still near its
strongest levels since May 2015. 
    "It is still firmer than the central bank probably wants to
see it," one Budapest-based dealer said. 
    The dealer said he would be looking for some hints in the
bank's regular statement after the meeting about the forint,
which has been supported by sound macroeconomic fundamentals.
    Another dealer did not rule out some kind of comments to
talk down the currency. But he said only further interest rate
cuts could weaken the forint. 
    The bank has pledged to keep the benchmark base rate
unchanged at 0.9 percent for a sustained period.
    June Hungarian gross wages figures released on Tuesday
showed an annual rise of 14.4 percent, maintaining the fastest
pace since 2005 and one of the fastest growth rates in Central
Europe.
    The Hungarian wage surge is still unlikely to lift annual
average inflation above the central bank's 3-percent target
before 2019, a Reuters poll of analysts showed last week.

    Germany's 10-year Bund yield was marginally higher on
Tuesday, though near one-week lows.     
    Hungarian bonds were slightly firmer, with the yield of the
10-year bond dropping 1 basis point to 3.05 percent. The
corresponding Polish yield rose marginally from
four-week lows to 3.3 percent.
    Hungary sold 3-month Treasury bills at an average yield of
zero on Tuesday for the first time ever.
    Central European stock indices mostly tracked a rise of
Western European shares, led by 0.5 percent rise in Budapest
.
    Bucharest's main stock index hovered in the past two
weeks' narrow ranges.
    The bourse shrugged off a threat from Prime Minister Mihai
Tudose, reported by the daily Ziarul Financiar, that unless
banks became fair and reported profits, the government would
feel bound to make a list of banks where Romanians' deposits
were at risk. 
    The remarks reflected a desire to generate more taxes from
banks, like Hungary and Poland.
    But tax policies have been changeable in Romania, and the
country's banking system has been solid.
    The comments did not immediately affect the shares of Banca
Transilvania, though the stocks eased 0.4 percent in
late morning trade. 
    
               CEE MARKETS  SNAPSH   AT  1037 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.111  26.084  -0.10%   3.43%
                                 0       5          
 Hungary                    303.85  303.31  -0.18%   1.64%
 forint                         00      50          
 Polish zloty               4.2760  4.2750  -0.02%   2.99%
 Romanian leu               4.5870  4.5871   +0.00  -1.13%
                                                 %  
 Croatian                   7.4010  7.4035   +0.03   2.08%
 kuna                                            %  
 Serbian                    119.34  119.38   +0.03   3.36%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1034.6  1032.0   +0.25   +12.2
                                 0       4       %      6%
 Budapest                   37299.  37097.   +0.54   +16.5
                                48      85       %      5%
 Warsaw                     2378.2  2377.2   +0.04   +22.0
                                 4       8       %      9%
 Bucharest                  8308.1  8317.9  -0.12%   +17.2
                                 8       5              6%
 Ljubljana                  811.06  809.00   +0.25   +13.0
                                                 %      3%
 Zagreb                     1901.9  1898.4   +0.18  -4.66%
                                 1       0       %  
 Belgrade                   721.68  723.00  -0.18%   +0.60
                                                         %
 Sofia                      719.06  720.71  -0.23%   +22.6
                                                        2%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.026  -0.026   +068b   -3bps
                                                ps  
   5-year                    0.063  -0.014   +034b   -2bps
                                                ps  
   10-year                   0.915   0.032   +050b   +2bps
                                                ps  
 Poland                                                   
   2-year                    1.772  -0.004   +248b   -1bps
                                                ps  
   5-year                    2.633   0.003   +291b   +0bps
                                                ps  
   10-year                   3.311   0.004   +290b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR     0.6     0.7     0.8       0
               IBOR=>                               
 Hungary               <BU    0.22   0.285    0.35    0.15
               BOR=>                                
 Poland                <WI   1.765   1.791   1.834    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Andrew Heavens)
  
 
 

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