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CEE MARKETS-Forint falls 1 pct from 28-month high as central bank signals easing
August 24, 2017 / 2:10 PM / in 3 months

CEE MARKETS-Forint falls 1 pct from 28-month high as central bank signals easing

    * Forint falls one pct vs euro from strongest level since
May 2015
    * Hungarian central bank says ready for further monetary
easing
    * Hungarian easing would buck global trends, Czech rate hike
    * Polish refiner stocks boost index to highest since June
2015

 (Adds Czech Treasury bill auction result, stocks rise)
    By Sandor Peto
    BUDAPEST, Aug 24 (Reuters) - The forint fell 1 percent
against the euro from 28-month highs on Thursday after Hungary's
central bank (NBH) signalled it stands ready to loosen monetary
conditions, bucking a global trend and a recent Czech central
bank (CNB) rate hike.
    The bank, replying to questions from Reuters, said a change
in its monthly statement released on Tuesday meant it "will
stand ready to ease monetary conditions further using
unconventional, targeted instruments".
    The bank dropped a previous conditional clause: "if
inflation remains persistently below the target".
    The forint, after hitting a 28-month high against
the euro in early trade at 301.72, sharply reversed course.
    At 1329 GMT, it traded at 304.60l, weaker by almost 1
percent from its early peak and down 0.6 percent from Wednesday.
    "Everybody in the market had expected the NBH comments like
Messiah," one Budapest-based fixed income trader said. "302 was
a too sensitive level to them ... they found the forint's rise
too fast." 
    In a note, Eszter Gargyan, an analyst at Citi Group in
Budapest, said: "Although the NBH is refraining from explicitly
mentioning the FX rate, we believe the current EURHUF level is
below the NBH's comfort zone due to adverse implications on
exporters and revaluation of FX reserves."     
    The NBH noted in its statement that central Europe's robust
economic performance was lifting its currencies.
    In Thursday's comments it said the inflation-targeting
regimes of the region's central banks were different in their
target levels and flexibility.
    That was a reference to the CNB, which has the region's
lowest inflation target at 2 percent, and lifted its record low
main interest rate in early August in the first such move in the
European Union since 2012.
    While the NBH, the region's most dovish central bank,
struggles with a firming currency, the rate hike has failed to
lift the crown from levels around 26.1 per euro.
    On Thursday it firmed 0.15 percent to 26.094.
    The Czech government sold 34.82 billion crowns worth of
four-week Treasury bills at an auction, much more than its
original offer, up to 5 billion forints.
    There have been concerns that big Treasury bill expiries in
the August-September period could weigh on the crown.
    In stock markets, the shares of Polish refiners Lotos
 and PKN Orlen rose, after Lotos management
gave a favourable outlook at a meeting with analysts on
Wednesday.
    Warsaw's bluechip stock index jumped 2 percent to
its highest levels since June 2015. Budapest's main index
set a new record high, and was up 0.67 percent.  
    
               CEE MARKETS  SNAPSHOT   AT  1529 CET         
                            CURRENCIES                      
                            Latest    Previo  Daily   Change
                                      us              
                            bid       close   change  in
                                                      2017
 Czech crown                 26.0940  26.132   +0.15   3.50%
                                           0       %  
 Hungary                    304.6000  302.67  -0.63%   1.39%
 forint                                   00          
 Polish zloty                 4.2695  4.2832   +0.32   3.15%
                                                   %  
 Romanian leu                 4.5810  4.5869   +0.13  -1.00%
                                                   %  
 Croatian                     7.4135  7.4075  -0.08%   1.91%
 kuna                                                 
 Serbian                    119.2000  119.35   +0.13   3.48%
 dinar                                    00       %  
 Note: daily   calculated   previous  close   1800          
 change        from                   at      CET     
                            STOCKS                          
                            Latest    Previo  Daily   Change
                                      us              
                                      close   change  in
                                                      2017
 Prague                      1035.48  1031.3   +0.40   +12.3
                                           3       %      6%
 Budapest                   38014.69  37753.   +0.69   +18.7
                                          22       %      8%
 Warsaw                      2439.37  2391.0   +2.02   +25.2
                                           6       %      3%
 Bucharest                   8351.45  8352.0  -0.01%   +17.8
                                           9              7%
 Ljubljana                    828.68  821.30   +0.90   +15.4
                                                   %      8%
 Zagreb                      1901.01  1899.7   +0.07  -4.70%
                                           6       %  
 Belgrade                     722.78  720.74   +0.28   +0.75
                                                   %       %
 Sofia                        720.47  723.02  -0.35%   +22.8
                                                          6%
                            BONDS                           
                            Yield     Yield   Spread  Daily
                            (bid)     change  vs      change
                                              Bund    in
 Czech                                                spread
 Republic                                             
   2-year                      0.011   0.037   +075b   +4bps
                                                  ps  
   5-year                      0.084   0.054   +040b   +6bps
                                                  ps  
   10-year                     0.903  -0.024   +053b   -3bps
                                                  ps  
 Poland                                                     
   2-year                      1.753  -0.023   +249b   -2bps
                                                  ps  
   5-year                      2.631  -0.005   +295b   +0bps
                                                  ps  
   10-year                     3.311  -0.006   +293b   -1bps
                                                  ps  
               FORWARD      RATE      AGREEMENT             
                            3x6       6x9     9x12    3M
                                                      interb
                                                      ank
 Czech Rep             <PR       0.6    0.71     0.8       0
               IBOR=>                                 
 Hungary               <BU      0.19    0.22   0.255    0.15
               BOR=>                                  
 Poland                <WI     1.763   1.789   1.825    1.73
               BOR=>                                  
 Note: FRA     are for ask                                  
 quotes        prices                                 
 ***********************************************************
 ***
     

 (Additional reporting by Robert Muller in Prague/Bartosz
Chmielewski and Marcin Goettig in Warsaw; Editing by David
Holmes and Susan Thomas)
  
 
 

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