June 24, 2020 / 9:50 AM / 14 days ago

CEE MARKETS-Forint falls on surprise cut as focus turns to Czech central bank

    By Anita Komuves and Jason Hovet
    BUDAPEST/PRAGUE, June 24 (Reuters) - Hungary's forint fell
further, underperforming other currencies in the region after a
surprise rate cut sent it to a one-month low, while markets
focused on Wednesday's rate meeting in Prague.
    The National Bank of Hungary followed rate cuts in Poland,
Romania and the Czech Republic to help their economies hammered
by the coronavirus crisis.
    Czech rates have dropped by 200 basis points since March,
the most among European Union countries, and the crown
was down 0.23% ahead of a central bank (CNB) meeting, but held
within a range seen throughout June.
    The CNB is expected to keep interest rates on hold until at
least the second half of 2021, a Reuters poll of analysts
showed.
    With its main repo rate at 0.25%, questions
have risen if the CNB could resort to unconventional policy
tools like currency interventions or quantitative easing.
    "We do not expect the CNB to use non-standard tools in the
foreseeable future," J&T Banka said in a note.
    The Hungarian forint fell 0.5% to 350.820 versus
the euro after the NBH unexpectedly cut its base rate
 by 15 basis points to 0.75% on Tuesday.
    "The FX market had only a brief, mild reaction to the rate
cut," Commerzbank said in a note. "But, this does not mean that
the forint will not be impacted over a period of time." 
    The bank called the cut a one-off, and said a reduction in
the one-week deposit facility was justified.
    In April, the NBH introduced a one-week deposit facility at
0.9%, which helped stabilise the forint, and deployed a
bond-buying programme to push yields down.
    "The central bank has moved away from its past liquidity
management system where it steered excess liquidity and is now
moving back to a more orthodox interest rate-setting monetary
system," Morgan Stanley said in a note.
    The Polish central bank offered to buy bonds worth 12
billion zlotys as part of its QE programme.
    Regional stocks weakened on the latest rise in new
coronavirus infections globally. Warsaw equities led
losses and were down 1% by 0814 GMT.
       
    
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1014              
                                     CET               
                                                              
                   CURRENC                                    
                   IES                                 
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  26.6600  26.5975   -0.23%   -4.61%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  350.820  349.130   -0.48%   -5.61%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.4462   4.4458   -0.01%   -4.27%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.8435   4.8445   +0.02%   -1.14%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.5780   7.5765   -0.02%   -1.75%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.530  117.550   +0.02%   +0.03%
 =       dinar     =>             0        0           
         Note:     calcula                    1800            
         daily     ted                        CET      
         change    from                                
                                                              
                   STOCKS                                     
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2020
 .PX     Prague              929.14  933.250   -0.44%  -16.72%
                                           0           
 .BUX    Budapest           37586.0  37595.8   -0.03%  -18.44%
                                  3        3           
 .WIG20  Warsaw    <.WIG20  1807.11  1825.99   -1.03%  -15.95%
                   >                                   
 .BETI   Buchares           8726.26  8707.79   +0.21%  -12.54%
         t                                             
 .SBITO  Ljubljan  <.SBITO   857.74   859.67   -0.22%   -7.36%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1625.15  1630.96   -0.36%  -19.44%
                   >                                   
 .BELEX  Belgrade  <.BELEX   666.95   670.87   -0.58%  -16.81%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   455.59   455.12   +0.10%  -19.81%
                   >                                   
                                                              
                   BONDS                                      
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   0.1180   0.0150   +078bp    +2bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   0.3660  -0.0060   +102bp    +0bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   0.8050   0.0140   +121bp    +2bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   0.1810  -0.0020   +085bp    +0bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   0.7630  -0.0070   +142bp    +0bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.4040   0.0090   +181bp    +1bps
 =RR     10-year   =RR>                             s  
                                                              
                   FRA                                        
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     0.30     0.30     0.31     0.34
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.58     0.52     0.49     0.88
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     0.25     0.26     0.27     0.27
                   ><WIBOR                             
                   =>                                  
         Note: FRA quotes                                     
         are for ask                                   
         prices                                        
         ********************************************         
         ******************                            
                                                              
 

 (Additional reporting by Alan Charlish in Warsaw;
Editing by Alexander Smith)
  
 
 
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