June 29, 2018 / 12:12 PM / 8 months ago

CEE MARKETS-Forint hits record low as relief over EU summit passes

    * Main stock indices up more than 1 pct, off multi-month
    * Global mood, EU summit deals help CEE assets
    * Currencies initially rebound, but return into the red
    * Slovenian June CPI shows slight pick-up in annual rate

 (Recasts with retreat of currencies, new analyst comments)
    By Sandor Peto
    BUDAPEST, June 29 (Reuters) - The forint sank to a
record low on Friday, resuming its downward march of the last
two months after it and other Central European currencies
enjoyed a brief boost amid relief that a shaky European Union
summit did not collapse overnight.
    The forint pierced the 330 line against the euro for the
first time ever, to trade at 330.1 at 1036 GMT, down 0.4
    Emerging markets have been received a thrashing in the past
two months amid tightening global liquidity and as funds flowed
into the United States where interest rates are on the up and
the state budget is expansive.
    Regional currencies and equities rose on Friday as risk
aversion abated in Asian stock markets and after European
leaders reached a deal on migration in the early hours after
tortuous talks.
    But appetite for the region's currencies quickly disappeared
    The region's main stock indices were still higher by more
than one percent at 1036 GMT, off multi-month lows hit earlier
this week.
    But regional currencies joined a retreat of most emerging
market units. As usual this year, the forint led the weakening.
    Investors have been indiscriminately selling the region's
most liquid units - the Czech crown, the forint and
the zloty - in the past months. A rise in inflation
has contributed to pressure on the currencies.    
    The crown has weakened less because the Czech central bank
has gradually increased its interest rates since last August.
    The forint has shed almost 6 percent against the euro so far
this year. The zloty and the crown - which both eased by 0.2
percent on Friday - weakened 4.5 and 1.8 percent, respectively.
    Friday's weakness in Central European units followed that of
other emerging market currencies, rather than being caused by
June inflation figures released in the euro zone, said Peter
Virovacz, analyst of ING in Budapest.
    Slovenia, the first to release June inflation data in the
region, reported a rise in the annual rate to 2.3 percent from
2.2 percent in May.
    "The euro zone figures, if anything, suggest lower inflation
in imported goods as core inflation has declined," Virovacz
    "I do not think inflation data had a role... The crown
should not weaken then as the Czech central bank (CNB) has been
tightening its policy," he added.
    The CNB delivered its fourth rate hike in the current cycle
on Wednesday.
    The zloty, after hitting a 17-month low at 4.373 against the
euro on Friday, may weaken further to 4.4, said Mateusz
Sutowicz, financial markets analyst at Bank Millennium.
    "This was also visible on the stock exchanges after
announcements of the U.S. introduction of tariffs on Chinese
goods and amid fears of growing protectionism," he said.
    "On top of that we see a weaker outlook for the U.S. economy
and global growth," he added.
            CEE       SNAPSHOT   AT                         
            MARKETS             1236 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.9980   25.9450    -0.20%    -1.75%
 crown      >                                       
 Hungary    <EURHUF=  330.1000  328.7900    -0.40%    -5.81%
 forint     >                                       
 Polish     <EURPLN=    4.3727    4.3620    -0.24%    -4.49%
 zloty      >                                       
 Romanian   <EURRON=    4.6605    4.6585    -0.04%    +0.41%
 leu        >                                       
 Croatian   <EURHRK=    7.3870    7.3810    -0.08%    +0.59%
 kuna       >                                       
 Serbian    <EURRSD=  117.8500  117.9700    +0.10%    +0.55%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1062.99  1051.850    +1.06%    -1.41%
 Budapest             35635.86  35258.85    +1.07%    -9.50%
 Warsaw                2121.96   2098.75    +1.11%   -13.78%
 Bucharest             8086.94   7990.67    +1.20%    +4.30%
 Ljubljana  <.SBITOP    888.16    888.06    +0.01%   +10.14%
 Zagreb                1812.73   1811.13    +0.09%    -1.64%
 Belgrade   <.BELEX1    733.89    730.03    +0.53%    -3.41%
 Sofia                  635.51    633.13    +0.38%    -6.19%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.2090    0.0410   +189bps     +4bps
   5-year   <CZ5YT=R    1.6490    0.0050   +194bps     -1bps
   10-year  <CZ10YT=    2.2270    0.0010   +191bps     +0bps
   2-year   <PL2YT=R    1.6410    0.0090   +232bps     +0bps
   5-year   <PL5YT=R    2.5470   -0.0100   +283bps     -3bps
   10-year  <PL10YT=    3.2270    0.0000   +291bps     +0bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                1.17      1.29      1.43      1.16
 Hungary                  0.66      0.88      1.03      0.26
 Poland                   1.75      1.78      1.83      1.70
 Note: FRA  are for ask prices                              
 (Additional reporting by Marcin Goclowski and Pawel Sobczak in
Warsaw, editing by Larry King and Raissa Kasolowsky)
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