* Zloty, forint firm as ECB comments do not get more hawkish
* Hungarian yields plunge helped by forint strength, ECB
comments
* Leu, crown retreat slightly
(Recasts with impacts of ECB comments)
By Sandor Peto
BUDAPEST, July 26 (Reuters) - Some Central European
currencies gained and Hungarian government bond yields plunged
on Thursday as comments from the European Central Bank
reinforced the closing out of earlier selling positions.
Those positions were opened in recent months as a dollar
rally triggered a sell-off in emerging markets and expectations
for a rise in interest rates in the region.
But the dollar's gains lost steam in the past week, leading
to a rebound in regional currencies, including the forint, which
set a record low past 330 against the euro early this month.
The dollar regained some strength against the euro on
Thursday as the ECB left interest rates on hold, as expected,
and ECB President Mario Draghi left intact plans to unwind its
stimulus programme by the end of the year.
The region's central banks look at the ECB for guidance as
higher interest rates in the euro zone would make their assets
less attractive. No change in the ECB's guidance takes pressure
off from some of the region's central banks to tighten policy.
The currencies of Hungary and Poland, where interest rates
are at record lows and no rise is expected this year, firmed.
The forint and the zloty rose 0.4
percent by 1354 GMT, with the forint trading at a safe distance
from its recent lows, at 324.25, also encouraging a closing of
short positions in Hungary's bond market, one trader said.
The 10-year benchmark paper traded at 3.22 percent, down 15
basis points from Wednesday's midday fixing, and the 3-year
yield fell even more, to 1.55 percent.
"Interbank BUBOR rates have also been dropping day
by day, like implied yields in FX swaps," the trader said.
"Positions which bet on a yield rise and a forint weakening
lost sense, speculation has lost direction and we see stops,"
the trader added.
Yields in the Czech Republic and Poland, where debt markets
were less hit in the past months than in Hungary, rose.
Regional stock markets firmed, led by 1.6 percent in
Warsaw's bluechip index, also reflecting better
sentiment after Wednesday's U.S.-EU talks eased fears of a trade
war.
Warsaw's firming was mainly driven by a 4.9 percent jump in
the shares of insurer PZU.
The Czech and Romanian currencies, buoyed recently by
expectations for further interest rate increases by their
central banks, gave up some ground against the euro.
The leu shed a quarter of a percent to 4.636,
retreating from two-month highs set on Wednesday. The crown
also eased a shade to 25.662, after hitting seven-week
highs early in the session.
CEE SNAPSHOT AT
MARKETS 1554 CET
CURRENCI
ES
Latest Previous Daily Change
bid close change in 2018
Czech <EURCZK= 25.6620 25.6520 -0.04% -0.47%
crown >
Hungary <EURHUF= 324.2500 325.4500 +0.37% -4.11%
forint >
Polish <EURPLN= 4.2860 4.3020 +0.37% -2.56%
zloty >
Romanian <EURRON= 4.6360 4.6245 -0.25% +0.94%
leu >
Croatian <EURHRK= 7.4030 7.4020 -0.01% +0.37%
kuna >
Serbian <EURRSD= 117.9000 117.9900 +0.08% +0.51%
dinar >
Note: calculated from 1800 CET
daily
change
Latest Previous Daily Change
close change in 2018
Prague 1092.41 1090.420 +0.18% +1.32%
0
Budapest 35420.14 34963.19 +1.31% -10.05%
Warsaw 2295.78 2260.70 +1.55% -6.72%
Bucharest 8014.04 7953.86 +0.76% +3.36%
Ljubljana <.SBITOP 886.08 888.04 -0.22% +9.88%
>
Zagreb 1831.50 1821.56 +0.55% -0.62%
Belgrade <.BELEX1 743.60 739.27 +0.59% -2.13%
5>
Sofia 635.89 636.02 -0.02% -6.13%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
2-year <CZ2YT=R 1.2510 0.1730 +186bps +18bps
R>
5-year <CZ5YT=R 1.6400 0.0990 +187bps +10bps
R>
10-year <CZ10YT= 2.1550 0.0330 +176bps +3bps
RR>
Poland
2-year <PL2YT=R 1.6290 0.0000 +224bps +1bps
R>
5-year <PL5YT=R 2.5000 0.0130 +273bps +1bps
R>
10-year <PL10YT= 3.1410 0.0130 +274bps +1bps
RR>
FORWARD RATE AGREEMEN
T
3x6 6x9 9x12 3M
interban
k
Czech Rep 1.44 1.65 1.77 1.20
<PRIBOR=
>
Hungary 0.36 0.54 0.73 0.21
Poland 1.74 1.77 1.82 1.70
Note: FRA are for ask prices
quotes
