November 12, 2019 / 9:56 AM / a month ago

CEE MARKETS-Zloty falls as Polish central bank forecasts growth slowdown

    By Gergely Szakacs
    BUDAPEST, Nov 12 (Reuters) - The Polish zloty fell
versus the euro in early trade on Tuesday after the National
Bank of Poland published its latest economic forecasts,
confirming an expected slowdown in the eastern European region
next year.
    By 0931 GMT, the zloty had regained some ground to trade
0.1% lower at 4.2750 per euro. The Hungarian forint,
the region's laggard in 2019, which has drifted to weaker levels
over the past days, shed 0.1% to 334.23.
    The Polish central bank, which left interest rates unchanged
last week, sees inflation remaining within its
target range in the coming years. However, it said growth would
slow to 3.6% next year from 4.3% expected in 2019.
    "On Tuesday morning, EURPLN opens around 4.273 after some
depreciation of the zloty on low liquidity during the Monday
national holiday," economists at Santander Bank Polska said.
    "We think that given the rapid rise of bond yields on core
markets, EURPLN may be going up towards 4.30 in the short run."
    The National Bank of Hungary, the region's most dovish
central bank, meets next Tuesday to discuss interest rates. Data
published last week showed an increase in inflation to 2.9% in
October. Core inflation rose to 4%.
    The central bank is unlikely to change interest rates as it
usually delivers any changes to its monetary policy framework
after updating its quarterly inflation report. The next such
meeting is due in December.
    The bank also expects growth to slow next year, to 3.3% from
4.5% seen in 2019.
    "There is no stopping the weakening trend in the forint.
Yesterday the Hungarian currency fell for the sixth consecutive
day versus the euro," economists at Erste Investment said.
    The analysts said that weakening opened the door to further
losses, towards record lows at 336 per euro.
    The Romanian leu was steady after October
inflation data met market expectations, slowing to 3.4% from
3.5% in September.
    "We think that the deceleration in the y/y consumer prices
is only temporary," analysts at Erste Group Research said in a
note.
    "We maintain our 2019 and 2020 headline inflation forecasts
at 4% and 3.4%, respectively, but see some upside risks for
2020, mainly due to the likely adoption of a new calendar for
the liberalisation of natural gas and electricity prices."
    
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1031              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2019
 EURCZK  Czech     <EURCZK  25.5100  25.5100   +0.00%   +0.77%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  334.230  333.950   -0.08%   -3.93%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.2750   4.2706   -0.10%   +0.34%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.7635   4.7630   -0.01%   -2.30%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.4450   7.4383   -0.09%   -0.47%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.350  117.455   +0.09%   +0.81%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2019
 .PX     Prague             1083.99  1085.25   -0.12%   +9.88%
                                          00           
 .BUX    Budapest           43238.7  43038.6   +0.46%   +10.48
                                  8        7                 %
 .WIG20  Warsaw    <.WIG20  2249.70  2255.46   -0.26%   -1.18%
                   >                                   
 .BETI   Buchares           9711.46  9720.79   -0.10%   +31.53
         t                                                   %
 .SBITO  Ljubljan  <.SBITO   871.67   871.10   +0.07%   +8.38%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1972.02  1972.14   -0.01%   +12.76
                   >                                         %
 .BELEX  Belgrade  <.BELEX   756.68   751.93   +0.63%   -0.66%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   556.94   557.77   -0.15%   -6.31%
                   >                                   
                            BONDS                             
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   1.3530   0.0120   +198bp    +2bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.2120   0.0080   +175bp    +0bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.5820  -0.0030   +181bp    -2bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   1.4270  -0.0070   +205bp    +0bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.8720   0.0170   +241bp    +1bps
 RR                RR>                              s  
 PL10YT            <PL10YT   2.2000   0.0080   +243bp    -1bps
 =RR     10-year   =RR>                             s  
                   FORWARD  RATE     AGREEME                  
                                     NT                
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     2.25     2.24     2.20     2.19
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.27     0.31     0.36     0.19
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     1.72     1.70     1.70     1.71
                   ><WIBOR                             
                   =>                                  
         Note:     are for ask                                
         FRA       prices                              
         quotes                                        
 
 (Reporting by Gergely Szakacs, additional reporting by Alan
Charlish in Warsaw and Luiza Ilie in Bucharest; editing by Larry
King)
  
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