February 21, 2018 / 3:25 PM / 6 months ago

CEE MARKETS-Polish zloty falls as rate-setter expresses currency concern

 (Updates prices, adds Czech crown, Orange Polska shares)
    * Polish zloty down 0.5 pct vs euro and dollar
    * Polish rate-setter Lon concerned about zloty strength
    * Hungarian forint down 0.2 pct, Serbian dinar gains
    * Shares in Polish largest telecoms operator down over 5 pct

    By Marcin Goettig
    WARSAW, Feb 21 (Reuters) - The Polish zloty, one of the
world's best-performing currencies last year, fell on Wednesday
as a central banker raised concern that its strength was
starting to hurt exports. 
    Other central European currencies were mixed, while a sharp
drop in the share price of Poland's largest telecoms operator
Orange Polska dragged down Warsaw's main index.
    The zloty fell 0.5 percent to 4.169 against the
euro by 1425 GMT and weakened 0.5 percent against the dollar to
3.380. 
    The Hungarian forint fell 0.2 percent as bond
yields eased ahead of a central bank meeting next week
, while the Serbian dinar strengthened by
0.1 percent despite a euros purchase by the central bank.
  
    The Czech crown was stable, shrugging off news
that trade unions at Volkswagen's Czech carmaker
Skoda Auto rejected the company's latest wage offer.
 
    The Czech Republic sold 9.73 billion crowns of treasury
bonds on Wednesday.
    Polish rate-setter Eryk Lon, one of the biggest doves on the
10-member rate-setting panel, was quoted as saying that the
strength of the zloty was starting to hurt
exports.
    The currency, supported by robust growth, record low
unemployment and a surge in tax revenue, gained a 20 percent
versus the dollar in 2017 and has added a further 3 percent this
year.
    Most of Poland's foreign trade is settled in euros, with
only about 10 percent settled in dollars, estimates Mateusz
Sutowicz, analyst at Warsaw-based Bank Millennium.  
    "The dollar accounts for a small share of Poland's exports,
so the zloty's gains should not have any major impact on foreign
trade," he said. 
    "Additionally, we don't believe that the zloty still has big
potential to appreciate versus the euro."
    A central bank quarterly survey published in January showed
that Polish companies estimate that a zloty stronger than 3.33
to the dollar -- only about 1 percent away from the current rate
-- would make exports unprofitable.
    Poland's finance minister has said the zloty's present
strong level is no cause for concern.
    On the stock market, shares in Poland's top telecoms
operator Orange Polska fell more than 5
percent after fourth-quarter results.
    Investors were concerned about the company's 7 percent
year-on-year fall in mobile revenue, said Ipopema Securities
analyst Marcin Nowak.
    "There is also a risk that the cost of Orange Polska's
(flagship) fibre investment will increase due to wage pressure,"
he said.
   
                 CEE        SNAPSHOT   AT  1525 CET             
                 MARKETS                                 
                            CURRENCIES                          
                            Latest    Previous  Daily    Change
                            bid       close     change   in 2018
 Czech crown                  25.350    25.339   -0.05%    0.70%
 Hungary forint              312.470   311.980   -0.16%   -0.62%
 Polish zloty                  4.169     4.148   -0.51%    0.16%
 Romanian leu                  4.661     4.662   +0.04%    0.36%
 Croatian kuna                 7.441     7.440   -0.01%   -0.17%
 Serbian dinar               117.940   118.110   +0.14%    0.39%
 Note: change    versus     previous  close at  1800            
                                                CET      
                            STOCKS                              
                            Latest    Previous  Daily    Change
                                      close     change   in 2018
 Prague                       1108.6    1106.1   +0.22%   +2.82%
 Budapest                    38873.4   38667.1   +0.53%   -1.28%
 Warsaw                       2395.6    2413.2   -0.73%   -2.67%
 Bucharest                    8286.6    8307.0   -0.25%   +6.87%
 Ljubljana                     815.9     818.9   -0.37%   +1.18%
 Zagreb                       1829.1    1855.4   -1.42%   -0.75%
 Belgrade        <.BELEX15     757.8     754.9   +0.38%   -0.26%
                 >                                       
 Sofia                         694.9     694.4   +0.08%   +2.58%
                            BONDS                               
                            Yield     Yield     Spread   Daily
                            (bid)     change    vs Bund  spread
 Czech Republic                                          change
   2-year        <CZ2YT=RR     0.518    -0.084   +103bp    -7bps
                 >                                    s  
   5-year        <CZ5YT=RR      1.06    -0.025   +099bp    -1bps
                 >                                    s  
   10-year       <CZ10YT=R      1.81    -0.059   +110bp    -3bps
                 R>                                   s  
 Poland                                                         
   2-year        <PL2YT=RR     1.712    -0.012   +222bp    +1bps
                 >                                    s  
   5-year        <PL5YT=RR     2.723    -0.021   +265bp    -1bps
                 >                                    s  
   10-year       <PL10YT=R     3.467    -0.044   +276bp    -2bps
                 R>                                   s  
                 FORWARD    RATE      AGREEMENT                 
                            3x6       6x9       9x12     3M
                                                         lending
 Czech Rep               <      0.97      1.09     1.25     0.91
                 PRIBOR=>                                
 Hungary                 <      0.07     0.115    0.185     0.02
                 BUBOR=>                                 
 Poland                  <      1.76      1.77     1.86     1.72
                 WIBOR=>                                 
 Note: FRA       are for                                        
 quotes          ask                                     
                 prices                                  
 *********************************************************
 
 (Additional reporting by Reuters bureaus, Radu Marinas in
Bucharest, Jason Hovet in Prague; Writing by Marcin Goettig;
Editing by David Goodman; For related news and prices, click on
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