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CEE MARKETS-Strong auction helps Hungarian assets buck regional currency fall
October 12, 2017 / 2:53 PM / 4 days ago

CEE MARKETS-Strong auction helps Hungarian assets buck regional currency fall

    * Currencies mostly ease on dollar rebound
    * Hungarian bond auction draws strong demand, forint firms
    * Budapest stocks hit record high

 (Recasts, with currencies fall, Hungarian bond auction, new
comments)
    By Sandor Peto and Marcin Goclowski
    BUDAPEST/WARSAW, Oct 12 (Reuters) - Central European
currencies mostly eased on Thursday as the dollar rebounded in
global markets, but gains in some government bonds and stocks
and a robust Hungarian bond auction suggested demand for
emerging market assets remains solid.
    The zloty and the leu eased 0.2 percent
against the euro by 1313 GMT.
    Polish data confirmed a rise in annual inflation to 2.2
percent in September, although that failed to prevent a retreat
in the zloty. Figures two weeks ago had led to forward rate
agreements pricing in a Polish interest rate hike
within 12 months, but most analysts expect a later rise.
    Polish and Hungarian government bond yields still mostly
fell by a few basis points.
    Hungary sold bonds worth 63.6 billion forints at two
auctions, 23.6 billion forints more than the planned amount and
for lower costs than those suggested by secondary market yields.
    Yields rose mildly after the auction, "but the positive
sentiment persists," one Budapest-based trader said.
    Budapest's stock index gained half a percent to reach
record highs, while the forint bucked the regional
trend of weakening.
    It traded on the firmer side of 310 against the euro, off
the five-month highs it reached at 312.58 after the central bank
cut its overnight deposit rate and announced liquidity-boosting
measures last month.
    "The central bank has failed to keep it weaker than 310, and
there are expectations that it will do something again, like
cutting the overnight rate further," the trader said.
    The leu, meanwhile, touched a two-week low against
the euro, and Romanian government bond yields rose by 2-3 basis
points. The leu has been the region's worst-performing unit
against the euro this year and has shed more than 1 percent.
    Last week a liquidity squeeze which also lifted interbank
leu interest rates helped the currency.
    But this week it has been retreating from a two-month high
due to worries over a government reshuffle and a bigger than
expected rise in Romanian inflation in September.
    Prime Minister Mihai Tudose said corruption allegations over
three ministers may pave the way for a proposed cabinet
reshuffle, which could create tension with the head of the
ruling Social Democrat party.
    The party's executive meets after markets close on Thursday
to decide whether to endorse the reshuffle proposal.
    
               CEE MARKETS  SNAPSH   AT  1513 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.890  25.879  -0.04%   4.31%
                                 0       5          
 Hungary                    308.95  309.33   +0.12  -0.04%
 forint                         00      50       %  
 Polish zloty               4.2741  4.2666  -0.18%   3.04%
 Romanian leu               4.5925  4.5852  -0.16%  -1.25%
 Croatian                   7.5077  7.5105   +0.04   0.63%
 kuna                                            %  
 Serbian                    119.31  119.46   +0.13   3.39%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1055.6  1054.3   +0.12   +14.5
                                 4       7       %      4%
 Budapest                   38688.  38453.   +0.61   +20.8
                                60      12       %      9%
 Warsaw                     2537.1  2551.7  -0.57%   +30.2
                                 6       8              5%
 Bucharest                  8001.6  8004.8  -0.04%   +12.9
                                 0       4              4%
 Ljubljana                  813.57  814.90  -0.16%   +13.3
                                                        8%
 Zagreb                     1866.4  1849.3   +0.92  -6.44%
                                 2       8       %  
 Belgrade                   727.79  726.96   +0.11   +1.45
                                                 %       %
 Sofia                      668.34  672.80  -0.66%   +13.9
                                                        7%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.057       0   +075b   +0bps
                                                ps  
   5-year                    0.486   0.004   +076b   +2bps
                                                ps  
   10-year                   1.357  -0.007   +091b   +1bps
                                                ps  
 Poland                                                   
   2-year                    1.728   0.004   +242b   +1bps
                                                ps  
   5-year                    2.703  -0.017   +298b   +0bps
                                                ps  
   10-year                   3.381  -0.034   +293b   -2bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.75    0.89       1       0
               IBOR=>                               
 Hungary               <BU    0.07     0.1    0.15    0.03
               BOR=>                                
 Poland                <WI   1.764   1.808   1.876    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Angus MacSwan and Hugh Lawson)
  
 
 

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