* Forint eases, Hungarian central bank maintains loose
policy
* Hungarian government bonds track core market yields higher
(Recasts with Hungarian central bank statement, Fed Chair
comments)
By Sandor Peto and Marcin Goclowski
BUDAPEST, Feb 27 (Reuters) - The forint hit a
new low for 2018 against the euro on Tuesday after the Hungarian
central bank (NBH) kept interest rates at record lows as
expected and stuck to its easy policy stance.
The NBH, Central Europe's most dovish central bank, said it
would keep monetary conditions loose for a prolonged period
using its unconventional policy measures.
These include a long-term interest rate swap facility
launched this year to flatten the curve of market interest rates
and yields.
The bank's statement coincided with a pledge from new U.S.
Federal Reserve Chairman Jerome Powell, in his first testimony
in Congress, to stick with gradual interest rate increases.
While there were no surprises out of either Budapest or
Washington, the policy differential still caused some further
forint weakening, dealers said.
It eased 0.1 percent to 314 against the euro by 1501 GMT.
The Czech crown weakened by 0.2 percent on what a
dealer said was some selling from London, while the zloty
was steady.
"I do not expect the forint to weaken past 315," one
Budapest-based dealer said.
The Hungarian central bank also reiterated that its policy
of keeping long-term bond yields low was targeted at their
spread relative to core market yields rather than at any nominal
levels.
Hungarian bond yields tracked an initial rise and later
retreat in yields in U.S. and German bonds.
The curve became a bit steeper, with the 10-year yield
rising 3-4 basis points to 2.57 percent and the 3-year 2021/C
yield rising one basis point to 0.88 percent.
The dollar firmed to a two-week high against the euro
. Its strength usually also puts pressure on currencies in
the European Union's emerging markets.
"Regarding the euro, event risk is too big ahead of the
weekend, with the Italian elections and the SPD party vote on
the (planned) German government coalition looming," another
Budapest-based dealer said even before the NBH statement.
In equities markets, Budapest's main stock index
bucked a modest rise in the region's main bourses, declining 0.8
percent, driven by a 3.9 percent fall in pharmaceutical firm
Richter after it issued a profit warning.
In Warsaw, Pekao gained 3.5 percent, after Poland's
second-biggest bank reported a surge in fourth-quarter earnings
and said it would spend all its 2017 and 2018 profits on paying
dividends.
Polish banks have reported solid results for the fourth
quarter of 2017 so far as the accelerating economy and social
transfers boosted salaries and appetite for credit.
CEE SNAPSHOT AT
MARKETS 1601 CET
CURRENCI
ES
Latest Previous Daily Change
bid close change in 2018
Czech <EURCZK= 25.4220 25.3760 -0.18% +0.47%
crown >
Hungary <EURHUF= 314.0000 313.6300 -0.12% -0.98%
forint >
Polish <EURPLN= 4.1707 4.1708 +0.00% +0.14%
zloty >
Romanian <EURRON= 4.6575 4.6578 +0.01% +0.48%
leu >
Croatian <EURHRK= 7.4450 7.4535 +0.11% -0.20%
kuna >
Serbian <EURRSD= 117.9700 118.0600 +0.08% +0.45%
dinar >
Note: calculated from 1800 CET
daily
change Latest Previous Daily Change
close change in 2018
Prague 1106.66 1101.470 +0.47% +2.64%
0
Budapest 38315.02 38620.84 -0.79% -2.70%
Warsaw 2417.55 2408.63 +0.37% -1.77%
Bucharest 8393.92 8379.01 +0.18% +8.26%
Ljubljana <.SBITOP 810.62 809.46 +0.14% +0.53%
>
Zagreb 1821.82 1828.95 -0.39% -1.14%
Belgrade <.BELEX1 752.24 753.76 -0.20% -0.99%
5>
Sofia 687.57 686.16 +0.21% +1.49%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
2-year <CZ2YT=R 0.6490 0.0550 +117bps +4bps
R>
5-year <CZ5YT=R 1.2670 0.0040 +122bps -1bps
R>
10-year <CZ10YT= 1.9210 0.0090 +125bps -1bps
RR>
Poland
2-year <PL2YT=R 1.6640 -0.0010 +218bps -1bps
R>
5-year <PL5YT=R 2.6450 -0.0150 +260bps -3bps
R>
10-year <PL10YT= 3.3830 -0.0130 +271bps -3bps
RR>
FORWARD RATE AGREEMEN
T
3x6 6x9 9x12 3M
interban
k
Czech Rep 0.98 1.09 1.25 0.91
<PRIBOR=
>
Hungary 0.08 0.10 0.19 0.02
Poland 1.75 1.77 1.86 1.72
Note: FRA are for ask prices
quotes
*************************************************
*************
(Additional reporting by Jason Hovet in Prague
Editing by John Stonestreet and Hugh Lawson)