* Romanian CPI falls but less than forecast
* Leu bucks CEE fall on dollar buying caused by Brexit worry
* Romanian bond yields edge higher after CPI data
* Romanian central bank holds repo auction, decent bond sale
seen
By Sandor Peto
BUDAPEST, Nov 12 (Reuters) - The leu bucked a dollar-driven
weakening of Central European currencies on Monday after data
showed Romanian inflation declined less than expected in
October.
The forint and the zloty fell 0.1
percent against the euro by 0939 GMT, in thin trade with Polish
markets closed for holiday. The Czech crown touched a four-month
low at 25.974.
They weakened because investors bought dollars amid doubts
that Britain will be able to secure a deal on quitting the
European Union next year.
The impact in the region was muted relative to the dollar's
gains, even though Britain is an important trade partner
and a key destination for millions of Central Europeans who
moved West for higher wages.
"One week they say this, the other week they say that (about
Brexit)," one Budapest-based currency dealer said. "Let's see
the end."
The leu traded higher against the euro at 4.6577
at 0939 GMT, near the six-week highs it reached on Friday.
Romania's annual inflation rate fell to 4.3 percent in
October from 5 percent in September. It was
forecast to fall to 4.1 percent.
The decline was less than the Romanian central bank had
hoped for. Last week, it sounded optimistic that inflation could
retreat to the top of its 1.5-3.5 percent target range soon,
Erste analyst Eugen Sinca said in a note.
"Under these circumstances, we do not rule out a hike in the
(bank's 2.5 percent) policy rate at beginning of 2019," he said.
Even before the data, Raiffeisen said in a note that the
decline in inflation could help some further decline in Romanian
government bond yields, because the central bank was unlikely to
keep raising interest rates before the second half of 2019.
But yields rose by a few basis points after the figures,
with two-year debt bid at 3.77 percent, up 2 basis points.
That followed a drop of 30 to 40 basis points along the
Romanian yield curve in recent weeks amid hopes for lower
inflation and higher real yields and liquidity injections from
the NBR.
The bank announced a repo auction for Monday. This could be
the third straight week when it pumps money into interbank
markets. Injections have supported demand for government bond
sales.
An auction of a new seven-year paper on Monday could also
draw decent demand, though the inflation data may deter some
players or push the yield a touch higher, ING analysts said in a
note.
CEE SNAPSHOT AT
MARKETS 1039 CET
CURRENCI
ES
Latest Previous Daily Change
bid close change in 2018
Czech <EURCZK= 25.9400 25.9400 +0.00% -1.53%
crown >
Hungary <EURHUF= 321.8200 321.4000 -0.13% -3.39%
forint >
Polish <EURPLN= 4.2960 4.2920 -0.09% -2.79%
zloty >
Romanian <EURRON= 4.6577 4.6584 +0.02% +0.47%
leu >
Croatian <EURHRK= 7.4270 7.4269 -0.00% +0.04%
kuna >
Serbian <EURRSD= 118.1700 118.3000 +0.11% +0.28%
dinar >
Note: calculated from 1800 CET
daily
change
Latest Previous Daily Change
close change in 2018
Prague 1086.70 1089.080 -0.22% +0.79%
0
Budapest 38539.47 38586.63 -0.12% -2.13%
Warsaw 2232.25 2232.25 +0.00% -9.30%
Bucharest 8670.09 8657.22 +0.15% +11.82%
Ljubljana <.SBITOP 815.45 811.93 +0.43% +1.12%
>
Zagreb 1781.29 1786.19 -0.27% -3.34%
Belgrade <.BELEX1 744.56 744.56 +0.00% -2.01%
5>
Sofia 597.04 597.76 -0.12% -11.87%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
2-year <CZ2YT=R 1.5070 0.0130 +215bps +3bps
R>
5-year <CZ5YT=R 1.8460 0.0230 +205bps +5bps
R>
10-year <CZ10YT= 2.1030 -0.0060 +172bps +2bps
RR>
Poland
2-year <PL2YT=R 1.5660 0.0000 +221bps +2bps
R>
5-year <PL5YT=R 2.4580 0.0000 +266bps +3bps
R>
10-year <PL10YT= 3.2350 0.0000 +285bps +3bps
RR>
FORWARD RATE AGREEMEN
T
3x6 6x9 9x12 3M
interban
k
Czech Rep 2.05 2.20 2.35 1.99
<PRIBOR=
>
Hungary 0.33 0.61 0.97 0.16
Poland 1.76 1.80 2.05 1.72
Note: FRA are for ask prices
quotes
*************************************************
*************
(Additional reporting by Luiza Ilie in Bucharest, editing by
Larry King)
