February 27, 2018 / 10:13 AM / 6 months ago

CEE MARKETS-Forint lingers near 2018 lows as central bank meets

    * Forint steadies after fall, central bank seen holding fire
    * May reaffirm dovish bias as Fed's Powell awaited
    * Investors also eye Italian election, German SPD vote

    By Sandor Peto and Marcin Goclowski
    BUDAPEST, Feb 27 (Reuters) - The forint steadied
near 2018 lows against the euro on Tuesday ahead of the outcome
of a meeting of the Hungarian central bank at which it is
expected to affirm its loose policy stance.
    After dipping to 313.88 per euro, its weakest level since
Dec. 18, the forint traded at 313.6 at 0925 GMT, returning to
Monday's closing levels.
    Central Europe's main currencies changed little as investors
awaited the first appearance before lawmakers later in the day
of new Federal Reserve Chairman Jerome Powell.
    His policy guidance could affect currencies in the European
Union's eastern wing either by triggering flows into the dollar
or affecting the euro/dollar cross, with a firming euro also
strengthening the region's currencies, traders said.
    "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," one
Budapest-based dealer said.
    Hungarian government bonds were also treading water, with
the central bank unlikely to change interest rates though it
could reaffirm its dovish policy bias, traders said.
    "I do not expect any significant impact even though the bank
might try to weaken the forint a bit further with its message,"
the dealer said, adding that the forint's underperformance in
the region in the past week may have been overdone.
    Figures on Tuesday showed a record low 3.8 percent
unemployment rate in Hungary for the November-January period,
signalling that a labour shortage could continue to boost wages,
and investments to improve efficiency amid economic growth,
analysts said.
    Budapest's main stock index bucked a modest rise in
the region's main bourses, declining 0.3 percent, driven lower
by a 3.4 percent fall in pharmaceutical firm Richter.
    Richter said its 2017 net profit will significantly fall
behind plan.
    In Warsaw, the stocks of Pekao rose by 3.6 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             1025 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.3770   25.3760    -0.00%    +0.65%
 crown      >                                       
 Hungary    <EURHUF=  313.6000  313.6300    +0.01%    -0.86%
 forint     >                                       
 Polish     <EURPLN=    4.1690    4.1708    +0.04%    +0.18%
 zloty      >                                       
 Romanian   <EURRON=    4.6565    4.6578    +0.03%    +0.50%
 leu        >                                       
 Croatian   <EURHRK=    7.4460    7.4535    +0.10%    -0.21%
 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                1105.78  1101.470    +0.39%    +2.56%
                                       0            
 Budapest             38504.83  38620.84    -0.30%    -2.22%
 Warsaw                2417.87   2408.63    +0.38%    -1.76%
 Bucharest             8397.76   8379.01    +0.22%    +8.31%
 Ljubljana  <.SBITOP    812.41    809.46    +0.36%    +0.75%
            >                                       
 Zagreb                1827.53   1828.95    -0.08%    -0.83%
 Belgrade   <.BELEX1    752.85    753.76    -0.12%    -0.91%
            5>                                      
 Sofia                  685.13    686.16    -0.15%    +1.13%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    0.7210    0.1270   +123bps    +10bps
            R>                                      
   5-year   <CZ5YT=R    1.2670    0.0040   +122bps     -2bps
            R>                                      
   10-year  <CZ10YT=    1.9530    0.0420   +128bps     +2bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6700    0.0050   +217bps     -2bps
            R>                                      
   5-year   <PL5YT=R    2.6660    0.0060   +262bps     -2bps
            R>                                      
   10-year  <PL10YT=    3.3970    0.0010   +272bps     -3bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                0.98      1.08      1.24      0.91
            <PRIBOR=                                
            >                                       
 Hungary                  0.07      0.11      0.18      0.02
                                                    
 Poland                   1.76      1.77      1.86      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
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 (Reporting by Sandor Peto; editing by John Stonestreet)
  
 
 
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