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CEE MARKETS-Zloty extends gains as Sept CPI comes in above forecasts
September 29, 2017 / 2:06 PM / 2 months ago

CEE MARKETS-Zloty extends gains as Sept CPI comes in above forecasts

    * Zloty hits 6-1/2-month low overnight, rebounds on Friday
    * 2.2 pct Sept CPI, above forecasts, buoys Polish currency
    * Polish, Hungarian bonds firm again after earlier retreat
    * Crown jumps to strongest level since Aug. 3 rate hike

 (Recasts with Polish inflation figure, Czech crown rise)
    By Sandor Peto and Marcin Goclowski
    BUDAPEST/WARSAW, Sept 29 (Reuters) - The zloty extended
gains against the euro on Friday after flash September data
showed a bigger-than-expected rise in Polish inflation, which
may worry some central bank rate-setters.
    After hitting 6-1/2-month lows overnight, the currency
rebounded in early trade even ahead of the data, which analysts
had expected to show a rise in annual inflation to 2 percent
from 1.8 percent in August.
    But the figures released in the afternoon showed inflation
rising to 2.2 percent.
    By 1315 GMT, the zloty had firmed 0.4 percent to
4.299.
    Polish government bond yields reversed an earlier fall and
rose 2-3 basis points from levels before the inflation figures,
with 10-year paper trading at 3.3375 percent.
    The inflation figures could have led to a bigger fall in
bond prices, but the fourth-quarter issuance figures released by
the government later limited the loss, said Arkadiusz Urbański,
analyst at Pekao SA.
    "The bond supply ... is quite supportive, because a
suprisingly low amount will be issued in next three months," he
said. "It is (however) going to only limit the yield rise and is
not enough to stop trends in markets." 
    Poland has financed 86 percent of planned borrowing needs
for 2017 by the end of September, Deputy Finance Minister Piotr
Nowak said in a statement. 
    The zloty and the forint, Central Europe's most liquid
currencies, were sold off earlier this week as investors flocked
into the dollar after hawkish comments from Federal Reserve
Chair Janet Yellen.
    Local factors had also helped the currencies fall - new
Polish proposals for judiciary reform which angered the European
Commission, and a new round of monetary easing measures in
Budapest.
    Appetite for the dollar receded in global markets on Friday,
and that helped Central European currencies.
    Both the forint and the Czech crown strengthened
by 0.2 percent against the euro. The leu also firmed
marginally, settling at 4.6. 
    On Wednesday the Czech National Bank disappointed some
investors by not lifting interest rates further to defend its
inflation target, after a rate hike on Aug. 3, the first in the
European Union since 2012.
    But the bank's hawkish comments keep expectations alive that
it will lift rates at its next meeting in November.
    The crown, touching 25.924 against the euro, reached its
strongest levels since the August rate hike.
    Foreign investors sitting on a huge pile of long crown
positions are closely watching the Czech unit's strength. If it
rises, some may take the opportunity to take profits by selling
it.
    
               CEE MARKETS  SNAPSH   AT  1514 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.995  26.039   +0.17   3.89%
                                 0       0       %  
 Hungary                    310.65  311.13   +0.15  -0.59%
 forint                         00      00       %  
 Polish zloty               4.2990  4.3154   +0.38   2.44%
                                                 %  
 Romanian leu               4.6005  4.6030   +0.05  -1.42%
                                                 %  
 Croatian                   7.4955  7.4915  -0.05%   0.80%
 kuna                                               
 Serbian                    119.02  119.25   +0.19   3.64%
 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                     1044.8  1043.6   +0.11   +13.3
                                 7       8       %      7%
 Budapest                   37612.  37191.   +1.13   +17.5
                                38      65       %      3%
 Warsaw                     2460.4  2427.0   +1.37   +26.3
                                 0       4       %      1%
 Bucharest                  7900.9  7934.6  -0.42%   +11.5
                                 1       3              2%
 Ljubljana                  796.55  800.48  -0.49%   +11.0
                                                        0%
 Zagreb                     1811.5  1821.3  -0.53%  -9.19%
                                 8       2          
 Belgrade                   720.76  723.17  -0.33%   +0.47
                                                         %
 Sofia                      689.22  689.37  -0.02%   +17.5
                                                        3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.157  -0.039   +085b   -4bps
                                                ps  
   5-year                     0.32   0.072   +060b   +9bps
                                                ps  
   10-year                   1.221  -0.008   +077b   +2bps
                                                ps  
 Poland                                                   
   2-year                    1.755   0.021   +245b   +2bps
                                                ps  
   5-year                    2.706   0.009   +298b   +3bps
                                                ps  
   10-year                   3.369   0.011   +292b   +4bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.75    0.88    1.02       0
               IBOR=>                               
 Hungary               <BU    0.09    0.11   0.165    0.04
               BOR=>                                
 Poland                <WI   1.775  1.8225   1.875    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Bartosz Chmielewski in Warsaw; editing
by Andrew Roche)
  
 
 

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