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Jason Hovet

CEE MARKETS-Currencies firm as Czech economy shrinks less than feared

Jul 31 2020

By Anita Komuves and Jason Hovet BUDAPEST/PRAGUE, July 31 Central European currencies edged up on Friday after the Czech Republic reported a smaller-than-expected contraction in its second-quarter GDP. The Czech economy shrank by a record 10.7% year-on-year in the quarter, lower than analysts' expectations of a 14.7% decline. "The worst is probably behind us in terms of GDP, as 2Q should mark the bottom," ING said in a note. "However, many economic indicators, such as unemployment, will only deteriorate with a delay, so in this sense, the worst is yet to come." The Czech crown was up 0.39% at 26.163 per euro, near a four-and-a-half-month high touched on Monday. The currency has strengthened 1.9% in July. The Hungarian forint was up 0.08% at 344.85 versus the common currency, gaining 2.7% this month. The Polish zloty firmed 0.2% to 4.403 per euro, strengthening 1% this month. The Czech numbers followed dismal GDP data from the United States and Germany. The economy of Germany, the most important trading partner of the CEE region, contracted by 10.1% in the second quarter. Both Hungary and Poland are slated to report second-quarter GDP data on Aug. 14. Central Europe's economies, like other European economies, were hammered by lockdowns prompted by the pandemic, shutting down supply chains and factories. The auto industry, long a driver of economic growth in central Europe, is likely to be one of the main drags on the region's efforts to recover as some car producers in central Europe expect output to drop 20%-25% this year. The European Commission has forecast a 7.0% decline in GDP this year in Hungary, a 7.8% fall in the Czech Republic. Poland's GDP was seen declining 4.6%. Prague's stocks gained 1.4% on Friday, while Warsaw's equities were up 1.2%. Budapest's stocks were down 0.17% while Bucharest's blue chip index was up 0.6%. CEE SNAPSHO AT MARKETS T 1112 CET CURRENC IES Latest Previou Daily Change s bid close change in 2020 EURCZK= Czech <EURCZK= 26.1630 26.2650 +0.39% -2.79% crown > EURHUF= Hungary <EURHUF= 344.850 345.130 +0.08% -3.97% forint > 0 0 EURPLN= Polish <EURPLN= 4.4031 4.4120 +0.20% -3.33% zloty > EURRON= Romanian <EURRON= 4.8320 4.8330 +0.02% -0.90% leu > EURHRK= Croatian <EURHRK= 7.4850 7.4885 +0.05% -0.53% kuna > EURRSD= Serbian <EURRSD= 117.520 117.620 +0.09% +0.04 dinar > 0 0 % Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2020 .PX Prague 888.95 876.940 +1.37% -20.32 0 % .BUX Budapest 34739.0 34797.2 -0.17% -24.62 8 4 % .WIG20 Warsaw 1783.84 1763.22 +1.17% -17.03 % .BETI Bucharest 8488.85 8434.93 +0.64% -14.92 % .SBITOP Ljubljana <.SBITOP 844.95 844.21 +0.09% -8.74% > .CRBEX Zagreb 1580.46 1577.54 +0.19% -21.66 % .BELEX1 Belgrade <.BELEX1 670.66 670.42 +0.04% -16.34 5 5> % .SOFIX Sofia 439.90 439.60 +0.07% -22.57 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT=R 2-year <CZ2YT=R 0.1820 0.1080 +089bp +10bp R R> s s CZ5YT=R 5-year <CZ5YT=R 0.3860 -0.0490 +112bp -4bps R R> s CZ10YT= 10-year <CZ10YT= 0.8270 0.0230 +138bp +3bps RR RR> s Poland PL2YT=R 2-year <PL2YT=R 0.1170 -0.0040 +082bp -1bps R R> s PL5YT=R 5-year <PL5YT=R 0.6700 -0.0200 +141bp -1bps R R> s PL10YT= 10-year <PL10YT= 1.2790 -0.0070 +183bp +0bps RR RR> s FORWARD 3x6 6x9 9x12 3M interb ank Czech Rep 0.31 0.32 0.36 0.34 <PRIBOR= > Hungary 0.60 0.58 0.57 0.60 Poland 0.19 0.19 0.19 0.23 Note: FRA are for ask quotes prices ********************************************** **************** (Additional reporting by Alan Charlish in Warsaw; Editing by Aditya Soni)

Auto industry set to put brakes on central Europe's COVID-19 recovery

Jul 30 2020

BUDAPEST/PRAGUE The auto industry, long a driver of economic growth in central Europe, is likely to be one of the main drags on the region's efforts this year to recover from the impact of COVID-19.

Central Europe's factory decline eases in June

Jul 01 2020

WARSAW/PRAGUEThe downturn in central European manufacturing eased markedly in June as economies reopened after the coronavirus lockdown, surveys showed on Wednesday, but the sector was still some way from returning to growth.

CEE MARKETS-Forint falls on surprise cut as focus turns to Czech central bank

Jun 24 2020

By Anita Komuves and Jason Hovet BUDAPEST/PRAGUE, June 24 Hungary's forint fell further, underperforming other currencies in the region after a surprise rate cut sent it to a one-month low, while markets focused on Wednesday's rate meeting in Prague. The National Bank of Hungary followed rate cuts in Poland, Romania and the Czech Republic to help their economies hammered by the coronavirus crisis. Czech rates have dropped by 200 basis points since March, the most among European Union countries, and the crown was down 0.23% ahead of a central bank (CNB) meeting, but held within a range seen throughout June. The CNB is expected to keep interest rates on hold until at least the second half of 2021, a Reuters poll of analysts showed. With its main repo rate at 0.25%, questions have risen if the CNB could resort to unconventional policy tools like currency interventions or quantitative easing. "We do not expect the CNB to use non-standard tools in the foreseeable future," J&T Banka said in a note. The Hungarian forint fell 0.5% to 350.820 versus the euro after the NBH unexpectedly cut its base rate by 15 basis points to 0.75% on Tuesday. "The FX market had only a brief, mild reaction to the rate cut," Commerzbank said in a note. "But, this does not mean that the forint will not be impacted over a period of time." The bank called the cut a one-off, and said a reduction in the one-week deposit facility was justified. In April, the NBH introduced a one-week deposit facility at 0.9%, which helped stabilise the forint, and deployed a bond-buying programme to push yields down. "The central bank has moved away from its past liquidity management system where it steered excess liquidity and is now moving back to a more orthodox interest rate-setting monetary system," Morgan Stanley said in a note. The Polish central bank offered to buy bonds worth 12 billion zlotys as part of its QE programme. Regional stocks weakened on the latest rise in new coronavirus infections globally. Warsaw equities led losses and were down 1% by 0814 GMT. CEE SNAPSHO AT MARKETS T 1014 CET CURRENC IES Latest Previou Daily Change s bid close change in 2020 EURCZK Czech <EURCZK 26.6600 26.5975 -0.23% -4.61% = crown => EURHUF Hungary <EURHUF 350.820 349.130 -0.48% -5.61% = forint => 0 0 EURPLN Polish <EURPLN 4.4462 4.4458 -0.01% -4.27% = zloty => EURRON Romanian <EURRON 4.8435 4.8445 +0.02% -1.14% = leu => EURHRK Croatian <EURHRK 7.5780 7.5765 -0.02% -1.75% = kuna => EURRSD Serbian <EURRSD 117.530 117.550 +0.02% +0.03% = dinar => 0 0 Note: calcula 1800 daily ted CET change from STOCKS Latest Previou Daily Change s close change in 2020 .PX Prague 929.14 933.250 -0.44% -16.72% 0 .BUX Budapest 37586.0 37595.8 -0.03% -18.44% 3 3 .WIG20 Warsaw <.WIG20 1807.11 1825.99 -1.03% -15.95% > .BETI Buchares 8726.26 8707.79 +0.21% -12.54% t .SBITO Ljubljan <.SBITO 857.74 859.67 -0.22% -7.36% P a P> .CRBEX Zagreb <.CRBEX 1625.15 1630.96 -0.36% -19.44% > .BELEX Belgrade <.BELEX 666.95 670.87 -0.58% -16.81% 15 15> .SOFIX Sofia <.SOFIX 455.59 455.12 +0.10% -19.81% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 0.1180 0.0150 +078bp +2bps RR RR> s CZ5YT= 5-year <CZ5YT= 0.3660 -0.0060 +102bp +0bps RR RR> s CZ10YT <CZ10YT 0.8050 0.0140 +121bp +2bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 0.1810 -0.0020 +085bp +0bps RR RR> s PL5YT= 5-year <PL5YT= 0.7630 -0.0070 +142bp +0bps RR RR> s PL10YT <PL10YT 1.4040 0.0090 +181bp +1bps =RR 10-year =RR> s FRA 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 0.30 0.30 0.31 0.34 Rep ><PRIBO R=> Hungary <HUFFRA 0.58 0.52 0.49 0.88 ><BUBOR => Poland <PLNFRA 0.25 0.26 0.27 0.27 ><WIBOR => Note: FRA quotes are for ask prices ******************************************** ****************** (Additional reporting by Alan Charlish in Warsaw; Editing by Alexander Smith)

UPDATE 2-CEE MARKETS-Hungary's first rate cut in four years sends forint to 4-week low

Jun 23 2020

(Updates prices, adds bonds, comments on policy tools) By Jason Hovet and Anita Komuves PRAGUE/BUDAPEST, June 23 The forint fell to a four-week low on Tuesday after Hungary's central bank delivered a surprise "symbolic" cut to its base interest rate, the first move in four years, and flagged a reduction coming in a key deposit facility. The Hungarian currency has long been hardest hit among central European peers, touching new record lows in the past year as the central bank kept loose policy before shifting when the coronavirus crisis struck in March. In April, it introduced a one-week deposit facility at 0.9%, which helped stabilise the forint after it touched a record low of 369.54 to the euro. It also deployed a bond-buying programme to push yields down as part of efforts to soothe the economic hit from the virus outbreak. On Tuesday, it unexpectedly cut its base rate by 15 basis points to 0.75%, which it called a one-off move, and said a reduction in the one-week deposit facility was justified. The forint fell more than 1% to as low as 350.89 per euro before settling at 350, down 0.9% on the day by 1405 GMT. Bond yields dropped 10 basis points and up to 14 bps on the longer end of the curve. While markets had started expecting a dovish turn due to weakening economic projections, the rate cut was a surprise and a trader said the forint could now retreat to a weaker range around the 355 level. The cut was surprising because in recent years the central bank had not used the base rate but other non-conventional tools to shape monetary policy, said David Nemeth of K&H Bank. "Today's move suggests that the base rate could have a bigger role in shaping monetary conditions in the future," he said. Other central European currencies, along with stocks, were firmer most of Tuesday with global markets more upbeat after confusion over the U.S.-China trade pact, which the former said remained intact. The Czech crown edged up a touch before its own rate meeting on Wednesday. Czech policymakers will likely leave rates unchanged, analysts said in a poll. The Polish zloty, after earlier gains, dipped less than 0.1% by later afternoon along with Romania's leu. On stock markets, Warsaw blue chips led gains, rising 1.7%. CEE SNAPSHO AT 1605 CET MARKETS T CURRENCIES Latest Previou Daily Change s bid close change in 2020 EURCZK Czech <EURCZK 26.6620 26.6715 +0.04% -4.61% = crown => EURHUF Hungary <EURHUF 350.000 347.080 -0.83% -5.39% = forint => 0 0 EURPLN Polish <EURPLN 4.4445 4.4428 -0.04% -4.23% = zloty => EURRON Romanian <EURRON 4.8449 4.8422 -0.06% -1.17% = leu => EURHRK Croatian <EURHRK 7.5692 7.6246 +0.73% -1.64% = kuna => EURRSD Serbian <EURRSD 117.530 117.580 +0.04% +0.03% = dinar => 0 0 Note: calculated from 1800 daily CET change STOCKS Latest Previou Daily Change s close change in 2020 .PX Prague 934.17 927.120 +0.76% -16.27% 0 .BUX Budapest 37632.8 37193.1 +1.18% -18.34% 1 1 .WIG20 Warsaw <.WIG20 1826.81 1797.05 +1.66% -15.04% > .BETI Buchares 8723.96 8683.52 +0.47% -12.56% t .SBITO Ljubljan <.SBITO 859.67 858.82 +0.10% -7.15% P a P> .CRBEX Zagreb <.CRBEX 1630.96 1640.76 -0.60% -19.16% > .BELEX Belgrade <.BELEX 670.87 671.33 -0.07% -16.32% 15 15> .SOFIX Sofia <.SOFIX 455.12 457.22 -0.46% -19.89% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech Republic spread CZ2YT= 2-year <CZ2YT= 0.1410 0.0380 +081bp +1bps RR RR> s CZ5YT= 5-year <CZ5YT= 0.3670 -0.1100 +103bp -13bps RR RR> s CZ10YT <CZ10YT 0.8030 0.0180 +122bp -1bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 0.1830 0.0100 +085bp -2bps RR RR> s PL5YT= 5-year <PL5YT= 0.7610 -0.0020 +143bp -2bps RR RR> s PL10YT <PL10YT 1.4020 0.0410 +182bp +2bps =RR 10-year =RR> s FRA 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 0.31 0.31 0.32 0.34 Rep ><PRIBO R=> Hungary <HUFFRA 0.84 0.79 0.74 0.88 ><BUBOR => Poland <PLNFRA 0.23 0.23 0.24 0.27 ><WIBOR => Note: FRA quotes are for ask prices ***************************************************** ********* (Reporting by Jason Hovet in Prague, Anita Komuves in Budapest and Alan Charlish in Warsaw, editing by Ed Osmond and Kirsten Donovan)

Czech crown seen leading CEE FX gains over next year: Reuters poll

Jun 05 2020

PRAGUE The Czech crown should gain the most among central European currencies over the next year as economies recover from massive hits due to the coronavirus outbreak, although Romania's leu is likely to stay under pressure, a Reuters poll showed on Friday.

Ungarische MVM legt E.ON Gebot für Innogys Vertriebsgeschäft in Tschechien vor

Jun 03 2020

Budapest/Prag Der ungarische Versorger MVM hat dem Energiekonzern E.ON ein Angebot für das von Innogy

UPDATE 1-Hungary's MVM joins bidding for E.ON's Czech Innogy asset sale

Jun 03 2020

BUDAPEST/PRAGUE, June 3 Hungary's state-owned energy group MVM has submitted a final bid for E.ON's Czech Innogy retail operations as it seeks to expand in central Europe, Chairman and CEO Gyorgy Kobor told Reuters.

Hungary's MVM joins bidding for E.ON's Czech Innogy asset sale

Jun 03 2020

BUDAPEST/PRAGUE, June 3 Hungary's state-owned energy group MVM has put in a final bid for E.ON's Czech Innogy retail operations as it seeks to expand in central Europe, chairman and CEO Gyorgy Kobor told Reuters.

Czech, Polish PMIs remain deep in red as factories wait on orders rebound

Jun 01 2020

PRAGUE/WARSAW The manufacturing downturn in the Czech Republic and Poland remained deep in May, surveys showed on Monday, as factories face a long slog to recover after coming out of coronavirus lockdowns.

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