January 17, 2018 / 3:28 PM / 4 months ago

CEE MARKETS-Leu rebounds as Romania averts crisis threat, crown surges

    * Leu rebounds, president accepts choice of PM
    * Crown hits 5-year high
    * Czech central banker comments fuel rate hike talk

 (Adds Romanian president's PM designate choice, crown surge to
multi-year high)
    By Sandor Peto
    BUDAPEST, Jan 17 (Reuters) - The leu rebounded on Wednesday
after Romanian president Klaus Iohannis accepted the
government's nominee as prime minister designate, averting the
risk of a political crisis.
    The leu had fallen towards record lows set on Dec. 29 at
4.68 against the euro after Mihai Tudose resigned as prime
minister on Monday.
    After the departure of its second prime minister since an
election 13 months ago, the ruling Social Democrat Party (PSD)
picked European Parliament lawmaker Viorica Dancila as the new
head of government.
    Iohannis, a critic of the government, accepted the choice on
Wednesday, even though there had been concerns that he might
reject Dancila, who is close to the party's powerful leader
Liviu Dragnea, and cause a crisis.
    Dragnea is one of a number of ruling coalition members
facing trial on corruption charges. He denies wrongdoing.  
 
    The leu rebounded after the president announced
his decision, trading at 4.6521 against the euro at 1602 GMT, up
0.1 percent.
    On Tuesday, the currency was supported by comments from
Romanian central bank Deputy Governor Liviu Voinea who said it
was very close to the level suggested by economic fundamentals.

    The Czech crown firmed more than 0.2 percent
against the euro and broke through the 25.4 line, reaching its
strongest levels in almost five years.
    The currency shrugged off the resignation on Wednesday of
the minority government of Andrej Babis after losing a
confidence vote in parliament on Tuesday.
    Political developments rarely influence the markets of the
fast-growing and stable Czech economy.
    Czech central banker Vojtech Benda had boosted the currency,
saying that inflation trends could point to more rapid rises in
interest rates, after two hikes since August.
    The crown gained momentum "after yesterday's Benda comments
and break of 25.5," one dealer said.
    The crown "has been extending its gains on rising bets that
the Czech National Bank will deliver another rate hike in early
February," KBC analysts said in a note.
    Polish central banker Grazyna Ancyparowicz told Radio Wnet
that interest rates in Poland would most likely be close to the
current record-low level throughout 2018.
    Another rate-setter, Eugeniusz Gatnar said a slowdown in
inflation in December meant he no longer saw a need to raise
interest rates in the first quarter. {nL8N1PC4F2] 
    The zloty held steady.
    A report by the Puls Biznesu daily said Poland was working
on launching a cryptocurrency.
    However, after the report, the digitisation ministry
withdrew its support for the start-up company working on the
plan, saying that any projects affecting money supply were the
domain of the central bank and the financial regulator KNF.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1702 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.4000   25.4450    +0.18%    +0.56%
 crown      >                                       
 Hungary    <EURHUF=  308.6500  308.7800    +0.04%    +0.73%
 forint     >                                       
 Polish     <EURPLN=    4.1696    4.1709    +0.03%    +0.16%
 zloty      >                                       
 Romanian   <EURRON=    4.6521    4.6556    +0.08%    +0.59%
 leu        >                                       
 Croatian   <EURHRK=    7.4270    7.4225    -0.06%    +0.04%
 kuna       >                                       
 Serbian    <EURRSD=  118.3000  118.4000    +0.08%    +0.17%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1115.63  1114.920    +0.06%    +3.48%
                                       0            
 Budapest             39387.04  39684.16    -0.75%    +0.02%
 Warsaw                2600.37   2591.10    +0.36%    +5.65%
 Bucharest             8316.59   8233.13    +1.01%    +7.26%
 Ljubljana  <.SBITOP    829.48    822.05    +0.90%    +2.86%
            >                                       
 Zagreb                1876.37   1879.60    -0.17%    +1.82%
 Belgrade   <.BELEX1    770.84    774.65    -0.49%    +1.45%
            5>                                      
 Sofia                  709.86    715.40    -0.77%    +4.78%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    0.6370    0.0040   +122bps     +1bps
            R>                                      
   5-year   <CZ5YT=R    1.0390    0.0540   +118bps     +7bps
            R>                                      
   10-year  <CZ10YT=    1.7680    0.0270   +121bps     +4bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.7230    0.1310   +230bps    +14bps
            R>                                      
   5-year   <PL5YT=R    2.6200    0.0040   +276bps     +2bps
            R>                                      
   10-year  <PL10YT=    3.2910    0.0150   +274bps     +2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                1.03      1.23      1.37      0.77
            <PRIBOR=                                
            >                                       
 Hungary                  0.10      0.16      0.23      0.02
                                                    
 Poland                   1.75      1.79      1.87      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Bucharest and Prague newsroom, Marcin
Goettig from Warsaw; Editing by Alison Williams and Jane
Merriman)
  
 
 
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