March 6, 2018 / 10:01 AM / 7 months ago

CEE MARKETS-Zloty eases, Polish central bank seen unworried by inflation

    * Zloty near 2018 lows ahead of Polish central bank's
meeting
    * Poland's CPI forecasts are seen showing not much price
pressure
    * Budapest leads continuing recovery in CEE stock markets

    By Sandor Peto and Marcin Goettig
    BUDAPEST/WARSAW, March 6 (Reuters) - The zloty
eased on Tuesday, trading near this year's weakest levels
against the euro ahead of a Polish central bank meeting which is
expected to see rates left on hold and new forecasts project
moderate inflation.
    Analysts in a Reuters poll unanimously forecast that the
bank will keep interest rates unchanged at its meeting on
Wednesday.  
    The central bank will publish its latest mid-term economic
forecasts after the meeting.
    "The latest inflation projection may surprise with its
dovish tone, which could exert some pressure on the zloty," BZ
WBK analysts said in their daily note.
    The Polish unit eased 0.1 percent to 4.1937 against the
euro, underperforming Central European peers which were either
flat or firmed slightly.
    The euro/dollar cross, often watched in the region's
markets, gave no clear guidance, while a continuing rebound of
equities after weeks of falling was a positive factor for
currencies.
    Dollar buying often causes selling of currencies in the
region. They have been mostly rangebound in the past week as
investors wait for clues about global trends from the European
Central Bank's upcoming meeting and U.S. economic data.
    The breakdown of Hungary's fourth-quarter economic output
data showed that a surge in household consumption and
investments continue to boost growth, even though a pick-up in
imports could narrow the country's big trade surplus.

    The forint, like the zloty, is close to its
weakest levels of the last few months as the Hungarian central
bank keeps policy loose, unlike the Czech central bank which
started to lift interest rates last year.
    Poland's central bank is seen as unlikely to raise rates
this year, and Hungary may keep them at record lows for years.
    Regional equities benefited from a rebound in global share
markets. Fears of a trade war between the United States and the
European Union have eased, but have not passed, keeping
investors cautious, analysts said.
    Technical factors helped some Hungarian stocks after last
month's decline caused by worsened global sentiment.
    Budapest's main index rose 1.2 percent as the four
companies which have the highest capitalization on the bourse
firmed, including pharmaceuticals Richter, which
gained 2.3 percent.
    Warsaw's bluechip index rose 0.4 percent.    
            CEE       SNAPSHOT   AT                         
            MARKETS             1008 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.4100   25.4300    +0.08%    +0.52%
 crown      >                                       
 Hungary    <EURHUF=  314.1700  314.1500    -0.01%    -1.04%
 forint     >                                       
 Polish     <EURPLN=    4.1937    4.1899    -0.09%    -0.41%
 zloty      >                                       
 Romanian   <EURRON=    4.6600    4.6605    +0.01%    +0.42%
 leu        >                                       
 Croatian   <EURHRK=    7.4250    7.4335    +0.11%    +0.07%
 kuna       >                                       
 Serbian    <EURRSD=  117.9600  117.9900    +0.03%    +0.46%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1120.83  1113.160    +0.69%    +3.96%
                                       0            
 Budapest             37580.30  37119.66    +1.24%    -4.56%
 Warsaw                2339.27   2330.10    +0.39%    -4.95%
 Bucharest             8425.15   8384.01    +0.49%    +8.66%
 Ljubljana  <.SBITOP    809.70    807.02    +0.33%    +0.41%
            >                                       
 Zagreb                1852.38   1850.65    +0.09%    +0.52%
 Belgrade   <.BELEX1    751.37    751.50    -0.02%    -1.11%
            5>                                      
 Sofia                  686.46    683.12    +0.49%    +1.33%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    0.8630    0.0600   +141bps     +7bps
            R>                                      
   5-year   <CZ5YT=R    1.2660    0.0000   +126bps     +0bps
            R>                                      
   10-year  <CZ10YT=    1.9370    0.0310   +129bps     +2bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6610    0.0040   +220bps     +2bps
            R>                                      
   5-year   <PL5YT=R    2.5790    0.0210   +257bps     +2bps
            R>                                      
   10-year  <PL10YT=    3.3290    0.0070   +269bps     +0bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                0.97      1.09      1.24      0.91
            <PRIBOR=                                
            >                                       
 Hungary                  0.08      0.11      0.19      0.02
                                                    
 Poland                   1.74      1.76      1.84      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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