May 16, 2019 / 10:15 AM / 7 months ago

CEE MARKETS-Currencies firm up on possible delay in U.S. car tariffs

    * Possible delay in U.S. tariffs on auto imports helps
    * Forint lags zloty, crude price rise highlights CPI concern
    * Equities are mixed, oil stocks rise in Budapest and Warsaw

    By Sandor Peto
    BUDAPEST, May 16 (Reuters) - Central European currencies
firmed up on Thursday on a report that U.S. President Donald
Trump planned to delay a decision that would have imposed
tariffs on auto imports from Europe.
    The region's currencies and the euro had jumped late
on Wednesday after a Bloomberg report on a possible six-month
postponement by Trump from a May 18 deadline.
    The auto industry and its exports are a key driver of
economic growth in Central Europe, as well as surging wages
which boost domestic demand.
    The zloty rebounded from two-month lows against
the euro, and by Thursday it returned to the firm side of the
4.3 line, testing its 200-day moving average.
    Trading at 4.2935 at 0923 GMT, it was firmer by 0.2%, even
though the Polish central bank played down the rise in inflation
in recent months at its meeting on Wednesday. 
    Its Governor Adam Glapinski said there was no need to change
interest rates until the end of the Monetary Policy Council's
term in 2022.
    Running at 2.2% in April, Polish annual inflation is still
well within the central bank's 1.5-3.5% target range.
    In Romania, however, inflation has exceeded a similar
target, and Hungary's 3.9% rate has approached the top of the
2%-4% target range.
    The forint also tracked the regional firming,
rebounding from a seven-month low of 325.8 versus the euro on
Wednesday, but it lost steam on Thursday, trading at 324.25.
    It eased against the zloty, and bid around 75.5 it
approached 7-1/2-month lows.
    "The Romanian central bank hinted at some tightening
(through managing market liquidity) at its meeting yesterday...
but there is no sign that the Hungarian central bank would
change policy," said Peter Virovacz, analyst of ING in Budapest.
    A rise in crude prices can push inflation further
up. The forint is also vulnerable as Hungary's real interest
rates are the lowest in the region while its economic growth is
the fastest based on first-quarter data released on Wednesday,
he said.
    "There is no risk in shorting the forint," he added.
    Central European stocks were mixed.
    Only the Prague bourse tracked a fall in European shares
 after the U.S. government imposed sanctions on Chinese
telecoms giant Huawei.
    A rebound in OTP Bank shares, driven by technical
factors, and in oil group MOL helped Budapest's
blue-chip index rise 0.6%.
    Warsaw's index was kept in the positive by a rise
in oil group PKN Orlen and copper producer KGHM
. The latter said that it may pay a dividend on its 2019
            CEE       SNAPSHOT   AT                         
            MARKETS             1123 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6950   25.7200    +0.10%    +0.05%
 crown      >                                       
 Hungary    <EURHUF=  324.2500  324.5500    +0.09%    -0.98%
 forint     >                                       
 Polish     <EURPLN=    4.2935    4.3032    +0.23%    -0.09%
 zloty      >                                       
 Romanian   <EURRON=    4.7620    4.7620    +0.00%    -2.27%
 leu        >                                       
 Croatian   <EURHRK=    7.4210    7.4205    -0.01%    -0.15%
 kuna       >                                       
 Serbian    <EURRSD=  117.8500  117.9600    +0.09%    +0.38%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1049.04  1052.070    -0.29%    +6.33%
 Budapest             40522.79  40291.35    +0.57%    +3.54%
 Warsaw                2172.82   2169.18    +0.17%    -4.56%
 Bucharest             8178.13   8174.16    +0.05%   +10.76%
 Ljubljana  <.SBITOP    864.62    863.47    +0.13%    +7.51%
 Zagreb                1841.68   1837.12    +0.25%    +5.31%
 Belgrade   <.BELEX1    731.86    733.01    -0.16%    -3.92%
 Sofia                  566.91    566.36    +0.10%    -4.63%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.5930   -0.1900   +225bps    -19bps
   5-year   <CZ5YT=R    1.6990    0.0120   +222bps     +2bps
   10-year  <CZ10YT=    1.8000   -0.0430   +191bps     -3bps
   2-year   <PL2YT=R    1.6520   -0.0040   +231bps     +0bps
   5-year   <PL5YT=R    2.2280    0.0050   +275bps     +1bps
   10-year  <PL10YT=    2.8540    0.0070   +297bps     +2bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.22      2.22      2.18      2.20
 Hungary                  0.35      0.52      0.69      0.16
 Poland                   1.75      1.74      1.76      1.72
 Note: FRA  are for ask prices                              
0 : 0
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