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UPDATE 1-CEE MARKETS-Forint firms after central bank, government bond yields drop further

 (Adds central bank decision, trader comments)
    PRAGUE/BUDAPEST, Dec 15 (Reuters) - The forint firmed
slightly after the National Bank of Hungary left its main rates
unchanged on Tuesday, while government bond yields extended
their slide in the wake of the EU budget deal.
    The Hungarian central bank said it would remain cautious in
its monetary policy despite having cut back its economic growth
forecast for next year, saying global market risks remained
elevated.  
    The NBH left its base rate at 0.6% and the overnight deposit
rate at -0.05%. It said that it will maintain the gap between
its 0.75% one-week deposit rate and the base rate as long as
inflation risks justify.  
    The forint was down 0.46% on the day by 1507 GMT,
trading at 355.33 per euro. The currency had pulled back from
multi-month highs before the bank's rate meeting but recouped
some of these losses after its comments.
    "The forint was little moved because none of the bank's
announcements were very surprising," a Budapest-based FX trader
said. "Today's half-percent move in pre-holiday illiquid trade
is normal, and the forint is still at a strong level."
    On Tuesday, Hungarian 3-year government bond yields dropped
about 20 basis points, while 5-year yields eased about 9 basis
points and longer-maturity bonds on average by 5-7, according to
the debt agency fixing page and traders.
    The debt agency announced its 2021 financing plan on Monday,
reducing government bond auction sales next year compared to
2020. The central bank also bought Hungarian government bonds at
its weekly auction earlier on Tuesday. 
    The debt agency said it would not hold any 3-year bond
auctions next year. nL8N2IU3WN
    "We can see that we will be moving towards a forcedly steep
yield curve, with no issues of bonds under five years and a lot
above that," a Budapest-based trader said.  
    Elsewhere, Poland's zloty was flat around 4.44 per
euro.
    Dealers and analysts have said currencies are falling into
ranges and liquidity is softening in the final weeks of 2020
trade, a year in which the main currencies are down 3.5-6.5%
after struggling to make up steep losses caused by the onset of
the pandemic in the first quarter.
    A Reuters poll forecasts the zloty and Czech crown will lead
gains next year, the latter helped by expectations the country's
central bank will turn more hawkish than others.    
                    CEE       SNAPSHO   AT                      
                    MARKETS   T        1617 CET          
                              CURRENC                           
                              IES                        
                              Latest   Previous  Daily   Change
                              bid      close     change  in 2020
 EURCZK=  Czech     <EURCZK=  26.3700   26.3650  -0.02%   -3.56%
          crown     >                                    
 EURHUF=  Hungary   <EURHUF=  355.330  353.7000  -0.46%   -6.81%
          forint    >               0                    
 EURPLN=  Polish    <EURPLN=   4.4424    4.4445   +0.05   -4.19%
          zloty     >                                 %  
 EURRON=  Romanian  <EURRON=   4.8685    4.8674  -0.02%   -1.65%
          leu       >                                    
 EURHRK=  Croatian  <EURHRK=   7.5320    7.5295  -0.03%   -1.15%
          kuna      >                                    
 EURRSD=  Serbian   <EURRSD=  117.590  117.6000   +0.01   -0.02%
          dinar     >               0                 %  
          Note:     calculated from              1800           
          daily                                  CET     
          change Latest   Previous  Daily   Change
                                       close     change  in 2020
 .PX      Prague               987.51  981.7800   +0.58  -11.48%
                                                      %  
 .BUX     Budapest            41849.7  41967.89  -0.28%   -9.19%
                                    3                    
 .WIG20   Warsaw              1951.02   1939.07   +0.62   -9.26%
                                                      %  
 .BETI    Buchares            9586.87   9573.01   +0.14   -3.91%
          t                                           %  
 .SBITOP  Ljubljan  <.SBITOP   887.27    892.96  -0.64%   -4.17%
          a         >                                    
 .CRBEX   Zagreb              1724.56   1737.68  -0.76%  -14.52%
 .BELEX1  Belgrade  <.BELEX1   720.96    720.51   +0.06  -10.07%
 5                  5>                                %  
 .SOFIX   Sofia                437.68    438.26  -0.13%  -22.96%
                                                                
                              Yield    Yield     Spread  Daily
                              (bid)    change    vs      change
                                                 Bund    in
          Czech                                          spread
          Republic                                       
 CZ2YT=R    2-year  <CZ2YT=R   0.1030   -0.0340   +087b    -4bps
 R                  R>                               ps  
 CZ5YT=R    5-year  <CZ5YT=R   0.8160   -0.0630   +161b    -7bps
 R                  R>                               ps  
 CZ10YT=            <CZ10YT=   1.2840   -0.0310   +190b    -3bps
 RR       10-year   RR>                              ps  
          Poland                                                
 PL2YT=R    2-year  <PL2YT=R   0.0110   -0.0440   +077b    -5bps
 R                  R>                               ps  
 PL5YT=R    5-year  <PL5YT=R   0.4380   -0.0690   +123b    -7bps
 R                  R>                               ps  
 PL10YT=            <PL10YT=   1.2630   -0.0420   +188b    -4bps
 RR       10-year   RR>                              ps  
                    FORWARD                                     
                              3x6      6x9       9x12    3M
                                                         interba
                                                         nk
          Czech                  0.38      0.44    0.59     0.35
          Rep       <PRIBOR=                             
                    >                                    
          Hungary                0.67      0.68    0.69     0.75
                                                         
          Poland                 0.22      0.25    0.26     0.21
                                                         
          Note:     are for ask                                 
          FRA       prices                               
          quotes                                         
          *********************************************         
          *****************                              
 
    

 (Reporting by Jason Hovet in Prague, Anita Komuves in Budapest
and Alan Charlish in Warsaw; Editing by Larry King and Mark
Heinrich)
  
 
 
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