March 18, 2020 / 3:09 PM / 22 days ago

UPDATE 1-CEE MARKETS-Forint at lows, stocks fall even as cbanks, governments announce measures to fight coronavirus

 (Adds Polish measures, surge in bond yields, updates markets)
    By Anita Komuves
    BUDAPEST, March 18 (Reuters) - The Hungarian forint hit a
fresh low against the euro on Wednesday and equities in Warsaw
gave up early gains even as central banks and governments in the
region announced steps to ease the economic damage from the
    Borders were closed, businesses were ordered to shut down
and major factories announced production halts across the
region, confirming that the spreading of the virus will deliver
a serious blow to Central European economies. 
    Poland proposed a 212 billion zloty ($51.96 billion)
programme on Wednesday to mitigate damage caused by the
coronavirus outbreak, which could last for months, Prime
Minister Mateusz Morawiecki said. 
    The package will help struggling companies pay salaries to
avoid layoffs, allow companies to delay social security payments
and increase infrastructure and healthcare spending, among other
    The zloty fell after the spending package was announced, and
was trading at 4.506 to the euro, down 0.62% on the day. The
Warsaw index gave up its earlier gains and was down
1.95% by 1248 GMT. 
    The Czech government is preparing up to 100 billion crowns
($4.05 billion) in direct aid for businesses and 900 billion
crowns ($36.42 billion) more through loan guarantees to help
them recover from the outbreak, Prime Minister Andrej Babis said
on Wednesday.
    Prague's equities fell 5.89% on Monday and the crown
 was trading at 27.128 to the euro, easing 0.05% on the
    The National Bank of Hungary also announced more emergency
measures on Wednesday. It called on domestic banks to impose a
moratorium on repayments of household loans and said that it was
examining restarting of its mortgage note purchases.

    The Hungarian forint set a record low versus the
euro at 352.21 in the afternoon. Budapest's stock index
plunged 5.15%.
    "Hungarian 10-year government bond yields are 54 basis
points higher than yesterday. Polish and Romanian 10-year
government bonds are also more than 30 basis points up today,"
an FI trader in Budapest said.
    The yield on the 10-year bond in Hungary was 3.31% on
Wednesday according to the fixings of debt agency AKK, up 41
basis points on the day.
    "The market is frozen, turnover is low, liquidity is tight.
Just like across Europe," he added. 
    Central banks and policymakers have been announcing interest
rate cuts and a series of measures this week to inject liquidity
in the markets to help businesses. 
    The Czech central bank announced an emergency 50-bps rate
cut to 1.75% on Monday, which was followed by a 50-bps rate cut
to 1.0% by the Polish central bank on Tuesday. The Polish
central bank also announced a bond-buying programme. 
    Hungary's central bank announced emergency steps on Monday,
widening the range of collateral it accepts from banks and
urging lenders to apply a loan-repayment moratorium for stricken
    "The upcoming monetary easing coupled with the challenging
environment for emerging market FX and risks assets should keep
CEE currencies under pressure in coming months," ING said in a
    "The tightly managed RON should continue to be the winner in
falling markets while CZK volatility will remain extra elevated
given the positioning-related moves in the currency and the risk
of CNB FX interventions. We also look for more HUF and PLN
weakness in coming weeks and months," it added.
    Romania's government was also expected to approve a package
of measures later on Wednesday worth almost 2% of GDP.
    The measures to be approved range from unemployment aid and
guaranteed lines of credit to postponing income tax payments by
some companies for up to two months.   
    The package is bound to further pressure the already
strained budget deficit, analysts say. 
   Before the virus outbreak Romania had been grappling with
swelling budget and current account deficits, while asset and
rating outlooks were pressured by generous fiscal measures
already approved ahead of this year's elections.
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1348              
                            Latest   Previou  Daily    Change
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  27.1280  27.1150   -0.05%   -6.25%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  350.810  347.940   -0.82%   -5.61%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.5065   4.4787   -0.62%   -5.55%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.8462   4.8500   +0.08%   -1.19%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.5950   7.5800   -0.20%   -1.97%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.610  117.580   -0.03%   -0.03%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
                            Latest   Previou  Daily    Change
                                     close    change   in 2020
 .PX     Prague              694.75  738.230   -5.89%  -37.73%
 .BUX    Budapest           29903.2  31525.6   -5.15%  -35.11%
                                  7        0           
 .WIG20  Warsaw    <.WIG20  1401.37  1429.28   -1.95%  -34.82%
 .BETI   Buchares           7253.72  7561.99   -4.08%  -27.30%
 .SBITO  Ljubljan  <.SBITO   729.16   738.16   -1.22%  -21.25%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1399.87  1433.51   -2.35%  -30.61%
 .BELEX  Belgrade  <.BELEX   649.12   655.93   -1.04%  -19.03%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   416.71   422.40   -1.35%  -26.65%
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
         Czech                                         spread
 CZ2YT=    2-year  <CZ2YT=   1.7660  -0.1860   +255bp   -26bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.6420   0.0310   +216bp   -10bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.7350   0.0510   +200bp   -12bps
 =RR     10-year   =RR>                             s  
 PL2YT=    2-year  <PL2YT=   1.4530   0.0000   +223bp    -7bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.7680   0.2200   +229bp    +9bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.9820   0.1700   +225bp    +0bps
 =RR     10-year   =RR>                             s  
                            3x6      6x9      9x12     3M
         Czech     <CZKFRA     1.02     0.52     0.43     1.83
         Rep       ><PRIBO                             
         Hungary   <HUFFRA     0.59     0.60     0.60     0.63
         Poland    <PLNFRA     0.90     0.83     0.77     1.50
         Note:     are for ask                                
         FRA       prices                              

 (Additional reporting by Luiza Ilie in Bucharest, Alan Charlish
in Warsaw and Jason Hovet in Prague; editing by Larry King and
Nick Macfie)
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