December 20, 2018 / 11:07 AM / 4 months ago

CEE MARKETS-Forint up, crown eases ahead of Czech central bank meeting

    * Hungary central bank sees core inflation rise
    * Czech central bank seen holding fire after hikes
    * Fed comments disappoint some investors, stocks fall 
    * Romanian shares extend plunge on tax plans

    By Sandor Peto and Alicja Ptak
    BUDAPEST/WARSAW, Dec 20 (Reuters) - The forint firmed to a
4-week high against the euro on Thursday, outperforming other
Central European currencies, after the Hungarian central bank
(NBH) forecast a rise in core inflation. 
    The crown was a shade weaker in thin trade ahead
of a meeting of the Czech central bank, which is expected to
keep rates on hold after four straight rate hikes.
    Hungary's central bank said in its inflation report that the
core price index excluding indirect tax effects could rise above
3 percent, the mid-point of its 2-4 percent 2019 target range.
    The forecast underpinned the NBH's shift towards more
hawkish rhetoric and followed Federal Reserve comments which
suggested a less steep course in its rate increases. 
    "The prospect of less steepness strengthens the euro and
also helps the forint," one Budapest-based currency trader said.
    "A slightly more hawkish language from the central bank can
help the forint in the longer term, while its rise can be caused
by the euro/dollar and the Fed," the dealer said.
    The forint touched a 4-week high against the euro and traded
at 321.8 at 1023 GMT, firmer by 0.2 percent.
    Polish and Hungarian government bond yields dropped
slightly, with Poland's 10-year yield setting a new 2-year low
at 2.865 percent.
    Many investors had expected stronger signals from the Fed
that its rate hikes, which caused selling of emerging markets
assets earlier this year, may be nearing an end.
    Stocks fell as a result, with Bucharest leading the decline,
its blue-chip index falling 3.6 percent to its lowest
level since early 2017.
    On Wednesday it posted its second-biggest loss for at least
two decades, shedding more than 12 percent after the government
announced shock plans to tax banking assets and cap gas prices.
    The index regained some ground early in the session, but
continued to fall on news that the government may approve the
measures at its meeting on Thursday.
    Warsaw's blue-chip index          fell by 0.9 percent,
partly due to a fall in energy sector stocks.
    "Energy companies are falling on the news that they will
have to contribute to the energy price hikes, it could be
somewhere between one or two billions zlotys in 2019," said
Krzysztof Kubiszewski, analyst at Trigon Dom Maklerski.    
            CEE       SNAPSHOT   AT                         
            MARKETS             1123 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.7670   25.7600    -0.03%    -0.87%
 crown      >                                       
 Hungary    <EURHUF=  321.8000  322.5200    +0.22%    -3.38%
 forint     >                                       
 Polish     <EURPLN=    4.2835    4.2830    -0.01%    -2.50%
 zloty      >                                       
 Romanian   <EURRON=    4.6601    4.6621    +0.04%    +0.42%
 leu        >                                       
 Croatian   <EURHRK=    7.4250    7.4205    -0.06%    +0.07%
 kuna       >                                       
 Serbian    <EURRSD=  118.3000  118.2700    -0.03%    +0.17%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1002.49  1008.110    -0.56%    -7.02%
                                       0            
 Budapest             39492.16  39966.19    -1.19%    +0.29%
 Warsaw       2321.56   2342.81    -0.91%    -5.67%
 Bucharest             7205.43   7475.22    -3.61%    -7.07%
 Ljubljana  <.SBITOP    791.64    791.71    -0.01%    -1.83%
            >                                       
 Zagreb                1732.88   1740.96    -0.46%    -5.97%
 Belgrade   <.BELEX1    759.42    762.05    -0.35%    -0.05%
            5>                                      
 Sofia                  589.78    589.65    +0.02%   -12.94%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6860    0.0100   +228bps     +1bps
            R>                                      
   5-year   <CZ5YT=R    1.8320    0.0230   +210bps     +3bps
            R>                                      
   10-year  <CZ10YT=    1.9960    0.0000   +177bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.3780   -0.0400   +198bps     -4bps
            R>                                      
   5-year   <PL5YT=R    2.3390    0.0180   +261bps     +2bps
            R>                                      
   10-year  <PL10YT=    2.8900   -0.0110   +266bps     +0bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.17      2.24      2.30      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.32      0.56      0.83      0.13
                                                    
 Poland                   1.75      1.76      1.79      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Reporting by Sandor Peto
Editing by Alexander Smith)
  
 
 
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