September 26, 2013 / 7:56 AM / 6 years ago

CEE MARKETS 3-Czech crown climbs after decision against intervention

* Czech central bank keeps interest rates on hold
    * Governor says likelihood of FX intervention remains high
    * Shares in Romania's Fondul hit record high on buyback plan

    BUDAPEST/BUCHAREST, Sept 26 (Reuters) - The Czech crown extended gains
against the euro on Thursday after a central bank policy meeting decided against
intervention to weaken the currency.
    With Czech interest rates close to zero, the central bank has said for
months that it will consider intervention to help lift inflation back to target
and boost exporters as the economy recovers after edging out of its 18-month
recession in the second quarter. 
    "We did not launch them (interventions), however we agreed that the
probability is not really changing ... and remains high," Czech National Bank
Governor Miroslav Singer said. 
    By 1345 GMT, the crown was bid at 25.692 per euro, up 0.6 percent
on the day, extending gains from earlier in the session.
    "For now, so long as the economy continues to recover and inflation doesn't
drop sharply, we doubt that a majority of MPC members will vote in favour of FX
intervention at upcoming meetings," Capital Economics said in a note. 
    "Either way, the bigger picture is that monetary conditions are set to
remain extremely loose until 2015 at the earliest."
    Other regional currencies were slightly weaker. The Polish zloty 
was down 0.3 percent, while the Hungarian forint and Romanian leu
 were 0.1 percent weaker.
    "Risk sentiment is a little off, given the U.S. budget debate," one
Bucharest trader said.
    Shares, which have benefited from the U.S. Federal Reserve's decision last
week to keep its stimulus intact, were mostly stronger, though traders said they
could face pressure as attention moves to fending off the possibility of a
damaging debt default. 
    Poland's broad market index led gains with a 1.3 percent advance on
the day, firming to its highest level in almost six years, supported by rising
bank shares on expectations of an economic rebound. 
    In Romania, shares in investment fund Fondul Proprietatea 
outperformed the blue chip index and reached a record high a day after
announcing plans to buy back roughly 4.4 percent of its shares at an estimated
cost of 441.6 million lei ($133.2 million). 
               CEE MARKETS SNAPSHOT AT 1559 CET
 ************************** CURRENCIES ************************
                             Latest  Previous   Daily   Change
                             bid     close      change  in 2013
 Czech crown                 25.679    25.849  +0.66%  -2.46%
 Hungarian forint           299.400   299.140   -0.09%  -2.82%
 Polish zloty                 4.229     4.216    -0.29%  -3.66%
 Romanian leu                 4.461     4.456   -0.12%   -0.40%
 Croatian kuna                7.610     7.613   +0.04%  -0.77%
 Serbian dinar              114.470   114.640   +0.15%   -1.90%
 Note: daily change calculated from previous close at 1600 GMT
 **************************** STOCKS **************************
                             Latest  Previous   Daily   Change
                                     close      change  in 2013
 Prague                      957.14    960.25   -0.32%  -7.85%
 Budapest                  18748.20  18687.49   +0.32%  +3.16%
 Warsaw                     2440.73   2407.12   +1.40%  -5.51%
 Bucharest                  6069.17   6059.49  +0.16%  +17.86%
 ***************************** BONDS **************************
                         Yield    Yield    Spread    Daily
                         (bid)    change   vs Bund   change in
 Czech Republic                                      spread
   2-year                0.253   +0.001   +6bps     0bps
   5-year                1.200     -0.073   +35bps      -8bps
  10-year                2.392    -0.023   +56bps     -3bps
 ******************* FORWARD RATE AGREEMENTS ******************
                              3x6     6x9    9x12  3M interbank
 Czech Rep                    0.480   0.470  0.460   0.45
 Hungary                      3.380   3.400  3.500   3.58
 Poland                       2.760   2.880  3.010   2.67
 Note: FRA quotes are for ask prices
 (Reporting by Krisztina Than and Luiza Ilie; Editing by Catherine Evans and
David Goodman)
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