November 1, 2019 / 10:08 AM / 20 days ago

CEE MARKETS-FX mostly up, crown settles lower near 3-month high

    PRAGUE, Nov 1 (Reuters) - Central European currencies held
onto gains on Friday with sluggish trade as some markets closed
for holiday, although the crown weakened a touch before the
region heads into a week of central bank meetings.
    Warsaw and Budapest markets were shut while Prague
gained 0.6% on the back of a rise in bank shares. 
    Telecoms group O2 Czech Republic was steady after
estimate-beating third-quarter earnings showing a profit decline
this year due to charges related to investments in 2018 had
slowed.
    On currency markets, the Hungarian forint edged up
less than 0.1% and the Polish zloty added 0.1% to 4.26
to the euro, boosted by dollar weakening. Serbia's
dinar stayed strong, up 0.1%.
    The Czech crown nudged down less than 0.1% to bid at 25.53
to the euro, parking near a three-month high. 
    The Czech central bank meets next week and has kept a debate
on a rate hike alive as it weighs risks from an external
economic slowdown, like in Germany, with solid domestic growth
keeping price pressures up. 
    This is despite an easing bias seen from the European
Central Bank and U.S. Federal Reserve. 
    Central banker comments this week, though, have pointed
toward stable rates when the board meets next Thursday.
    "The bank at its November meeting will likely again decide
whether to keep rates stable or raise them. In view of
developments abroad and persisting risks, we expect the former
possibility," Ceska Sporitelna analysts said.
    Despite talks of a potential rate hike, Raiffeisen said rate
cuts next year could happen and revived bets on that would boost
government bonds, to which it started a buy recommendation. 
    Markit's Czech purchasing managers' index (PMI) showed
manufacturing sentiment improved last month but was still in
negative territory, adding to arguments.
    "PMI has stabilised after plunging to a decade-low...but
activity remains weak and the breakdown offers less
encouragement," Capital Economics economist Liam Peach said,
adding industrial production could fall in the coming months.
    Other central banks in the region are in wait-and-see mode
as fast growth seen in recent years starts to slow.
    Poland's central bank is expected to stay pat next week
while Serbian policymakers may also hold fire, staying cautious
after cutting borrowing costs twice this year.
    The Serbian dinar bid at 117.37 to the euro on Friday. 
    The central bank bought 10 million euros to stem dinar gains
on Thursday.
    For most of 2019, the bank has bought euros in the local
interbank market to reduce appreciation pressures on the dinar
that include demand for state bonds, remittances from Serbs
working in the European Union and investment flows.
         
                  CEE      SNAPSH   AT                   
                  MARKETS  OT      1044            
                                   CET             
                           CURREN                        
                           CIES                    
                           Latest  Previo  Daily   Change
                                   us              
                           bid     close   change  in
                                                   2019
 EURCZK  Czech    <EURCZK  25.530  25.521  -0.03%   +0.69
 =       crown    =>            0       5               %
 EURHUF  Hungary  <EURHUF  328.05  328.41   +0.11  -2.12%
 =       forint   =>           00      50       %  
 EURPLN  Polish   <EURPLN  4.2603  4.2615   +0.03   +0.69
 =       zloty    =>                            %       %
 EURRON  Romania  <EURRON  4.7555  4.7538  -0.04%  -2.13%
 =       n leu    =>                               
 EURHRK  Croatia  <EURHRK  7.4530  7.4550   +0.03  -0.58%
 =       n kuna   =>                            %  
 EURRSD  Serbian  <EURRSD  117.37  117.50   +0.11   +0.79
 =       dinar    =>           00      00       %       %
         Note:    calculated from          1800          
         daily                             CET     
         change                                    
                                                         
                           Latest  Previo  Daily   Change
                                   us              
                                   close   change  in
                                                   2019
 .PX     Prague            1058.0  1050.8   +0.68   +7.24
                                2     700       %       %
 .BUX    Budapes           42159.  42159.   +0.00   +7.72
         t                     58      58       %       %
 .WIG20  Warsaw   <.WIG20  2194.1  2194.1   +0.00  -3.63%
                  >             0       0       %  
 .BETI   Buchare           9597.5  9518.8   +0.83   +29.9
         st                     5       9       %      8%
 .SBITO  Ljublja  <.SBITO  853.56  853.56   +0.00   +6.13
 P       na       P>                            %       %
 .CRBEX  Zagreb   <.CRBEX  1991.9  1991.9   +0.00   +13.9
                  >             8       8       %      0%
 .BELEX  Belgrad  <.BELEX  750.48  749.88   +0.08  -1.47%
 15      e        15>                           %  
 .SOFIX  Sofia    <.SOFIX  555.22  556.84  -0.29%  -6.60%
                  >                                
                           BONDS                         
                           Yield   Yield   Spread  Daily
                           (bid)   change  vs      change
                                           Bund    in
         Czech                                     spread
         Republi                                   
         c                                         
 CZ2YT=           <CZ2YT=  1.2910  0.0890   +194b   +8bps
 RR      2-year   RR>                          ps  
 CZ5YT=           <CZ5YT=  1.0740  -0.085   +171b   -9bps
 RR      5-year   RR>                   0      ps  
 CZ10YT           <CZ10YT  1.3690  -0.010   +177b   -1bps
 =RR     10-year  =RR>                  0      ps  
         Poland                                          
 PL2YT=           <PL2YT=  1.4200  -0.016   +207b   -3bps
 RR      2-year   RR>                   0      ps  
 PL5YT=           <PL5YT=  1.7300  0.0020   +237b   +0bps
 RR      5-year   RR>                          ps  
 PL10YT           <PL10YT  1.9710  0.0060   +237b   +1bps
 =RR     10-year  =RR>                         ps  
                  FORWARD  RATE    AGREEM                
                                   ENT             
                           3x6     6x9     9x12    3M
                                                   interb
                                                   ank
         Czech    <CZKFRA    2.25    2.24    2.11    2.18
         Rep      ><PRIBO                          
                  R=>                              
         Hungary  <HUFFRA    0.28    0.31    0.35    0.20
                  ><BUBOR                          
                  =>                               
         Poland   <PLNFRA    1.73    1.71    1.67    1.71
                  ><WIBOR                          
                  =>                               
         Note:    are for ask                            
         FRA      prices                           
         quotes                                    
         ****************************************        
         **********************                    
                                                         
 
 (Reporting by Jason Hovet in Prague and Aleksandar Vasovic in
Belgrade, Editing by Angus MacSwan)
  
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