September 24, 2019 / 9:50 AM / 24 days ago

CORRECTED-CEE MARKETS-Forint hits new record low ahead of rates decision

 (Corrects paragraph 13 to read 2.073% instead of 22.073%; fixes
typo in paragraph 12)
    WARSAW, Sept 24 (Reuters) - The Hungarian forint
hit a record low for the second day in a row on Tuesday ahead of
a central bank meeting in the country where rate-setters are
expected to leave the cost of borrowing unchanged.
    Hungary's base rate is the lowest in the region at
0.9% and analysts expect the central bank to keep it there in
2019 and 2020.
    Like other central banks in the region the National Bank of
Hungary has pursued a wait-and-see policy, with monetary easing
in major global economies offsetting domestic inflation
concerns.
    "Inflation is still above-target in Hungary – hence, no
immediate policy easing is on the menu – but, the continuing
slide of the HUF exchange rate suggests that the FX market may
be preparing for MNB to return to monetary easing at some point
again," Commerzbank analysts said in a note.
    The forint hit a record low against the euro of 336.02 in
morning trade before paring its losses to trade at 335.2 at 0919
GMT.
    The Czech crown was 0.09% stronger at 25.865 and
the Polish zloty was 0.35% stronger at 4.3765.
    "It was at elevated levels so maybe some market players
decided to buy zloty because it was cheap," said a Warsaw-based
currency trader.
    Czech central bankers will meet on Wednesday and analysts
expect them to leave rates unchanged.
    The central bank has paused its two-year tightening cycle
since delivering a rate hike in May, when it raised the key
two-week repo rate by 25 basis points to 2.00%, the
highest since 2008.
    In Poland, the registered unemployment rate remained stable
at 5.2% in August, in line with analysts' expectations. 
    "At the end of the year it may increase around 5.3-5.4%,"
Monika Kurtek, chief economist at Bank Pocztowy said in a note.
    "Higher values, despite the slowdown of the Polish economy,
should not be expected due to the limited supply of workers in
Poland."
    Polish yields were little changed at the shorter end of the
curve, but 10-year yields rose 2.8 basis points to
2.073%. The spread against German bunds was up 2 basis points.
    "The extension of the spread of Polish bonds over German
(the PL-DE 10Y spread increased by nearly 10 bp on Monday) in
part reflects the assessment of credit risk in connection with
the possible announcement of the CJEU ruling at the beginning of
October," PKO Bank Polski analysts said in a note
    The Court of Justice of the European Union (CJUE) is
scheduled to make a decision on abusive clauses in Swiss-franc
mortgages issued to Polish customers in October.
    Czech 10-year yields were little changed at 1.3410%.
    Stocks were higher with Warsaw's blue-chip WIG 20 index
 up 0.48% and Prague's PX index up 0.28%.
    mBank was the best performer in Warsaw, rising 5% after it
announced that parent Commerzbank plans to sell its stake in the
lender.
    
    
            CEE        SNAPSHOT   AT                         
            MARKETS              1119 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.8650   25.8870    +0.09%    -0.61%
 crown                                               
 Hungary               335.2000  335.1500    -0.01%    -4.21%
 forint                                              
 Polish                  4.3765    4.3916    +0.35%    -1.99%
 zloty                                               
 Romanian                4.7485    4.7500    +0.03%    -1.99%
 leu                                                 
 Croatian                7.4040    7.4081    +0.06%    +0.08%
 kuna                                                
 Serbian               117.4800  117.6000    +0.10%    +0.70%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1047.95  1045.030    +0.28%    +6.22%
                                        0            
 Budapest              40840.87  40800.21    +0.10%    +4.35%
 Warsaw                 2157.63   2147.32    +0.48%    -5.23%
 Bucharest              9520.24   9542.83    -0.24%   +28.94%
 Ljubljana               864.75    856.77    +0.93%    +7.52%
 Zagreb                 1924.57   1921.25    +0.17%   +10.05%
 Belgrade   <.BELEX15    753.64    754.04    -0.05%    -1.06%
            >                                        
 Sofia                   573.14    572.86    +0.05%    -3.59%
                       BONDS                                 
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.3410    0.0990   +205bps     +9bps
            >                                        
   5-year   <CZ5YT=RR    1.0680   -0.0030   +183bps     -1bps
            >                                        
   10-year  <CZ10YT=R    1.3410   -0.0050   +191bps     -2bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.4660   -0.0010   +218bps     -1bps
            >                                        
   5-year   <PL5YT=RR    1.8340    0.0210   +260bps     +1bps
            >                                        
   10-year  <PL10YT=R    2.0730    0.0280   +264bps     +2bps
            R>                                       
            FORWARD    RATE      AGREEMEN                    
                                 T                   
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      2.16      2.09      1.96      2.14
            PRIBOR=>                                 
 Hungary            <      0.28      0.33      0.37      0.21
            BUBOR=>                                  
 Poland             <      1.73      1.70      1.67      1.72
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 **************************************************          
 ************                                        
 

 (Reporting by Alan Charlish in Warsaw, Gergely Szakacs in
Budapest and Jason Hovet in Prague, additional reporting by
Marcin Goclowski, editing by Ed Osmond)
  
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