May 24, 2019 / 9:13 AM / 6 months ago

CEE MARKETS-Forint leads gains, helped by dollar's weakening

    By Krisztina  Than
    BUDAPEST, May 24 (Reuters) - Hungary's forint outperformed
central European currencies on Friday, rising 0.3%, helped by
the dollar's weakening, which improved risk appetite in emerging
markets.
    The dollar slipped after weak U.S. manufacturing activity
data sparked worries that the trade conflict with China may hurt
its economy and affect the currency's safe-haven status.
    "There was this bad U.S. figure ... and now everybody is
trying to assess how the trade war would impact the dollar, plus
the Fed has been rather dovish, so that points to dollar
weakening," a currency dealer said in Budapest.
    "This improved risk sentiment in emerging markets and could
be behind the forint's gains today."
     The Hungarian forint, which has been testing new
2-year lows versus the euro in recent weeks, was trading 0.3%
firmer at 326.10 per euro at 0838 GMT, regaining some ground
ahead of the central bank's rate meeting on Tuesday.
    However, uncertainty still prevailed in markets over
politics in Britain and the prospect of a new Brexit referendum
as well as the ongoing European parliament elections.
    Analysts at brokerage Equilor said the forint has bounced
back from 327.50 on Thursday so there was a chance for some
positive correction. However, they said the forint could only
gain substantially if it manages to firm past 325 to the euro.  
     The Czech crown was stuck at a fresh 3-month low.
    "It looks like there were some stop losses (pushing the
crown even weaker)," a trader said. "We are seeing now some
bigger demand customers (for hedging at these levels), but I had
anticipated more interest."
    Market players expect the National Bank of Hungary to leave
interest rates on hold next Tuesday, and expect more guidance
from the dovish bank at the June meeting, when the central bank
will discuss its next inflation report.
    The NBH will keep its base interest rate on hold for the
rest of 2019, preferring to tackle rising inflation by letting
interbank rates rise, a Reuters poll found.
    Main stock indexes in the region were also in positive
territory on Friday, with Warsaw trading 0.7% higher
and Budapest also rising 0.8% by 0855 GMT. 
    PKN Orlen rose 1% after Morgan Stanley boosted its
rating on Poland's biggest oil refiner to "overweight" from
"equal-weight"
           CEE MARKETS  SNAPSHOT      AT  1038                  
                                     CET                 
                        CURRENCIES                              
                        Latest       Previous    Daily   Change
                        bid          close       change  in 2019
 Czech                      25.8460     25.8280  -0.07%   -0.54%
 crown                                                   
 Hungary                   326.1000    327.0000   +0.28   -1.54%
 forint                                               %  
 Polish                      4.2975      4.3035   +0.14   -0.18%
 zloty                                                %  
 Romanian                    4.7585      4.7596   +0.02   -2.20%
 leu                                                  %  
 Croatian                    7.4270      7.4275   +0.01   -0.23%
 kuna                                                 %  
 Serbian                   117.9600    117.9500  -0.01%   +0.29%
 dinar                                                   
 Note:     calculated from                       1800           
 daily                                           CET     
 change                                                  
                                                                
                        Latest       Previous    Daily   Change
                                     close       change  in 2019
 Prague                     1044.90   1038.0900   +0.66   +5.91%
                                                      %  
 Budapest                  40327.32    40010.72   +0.79   +3.04%
                                                      %  
 Warsaw                     2188.46     2173.09   +0.71   -3.87%
                                                      %  
 Buchares                   8120.10     8109.89   +0.13   +9.97%
 t                                                    %  
 Ljubljan                    875.31      872.01   +0.38   +8.83%
 a                                                    %  
 Zagreb                     1873.26     1863.84   +0.51   +7.12%
                                                      %  
 Belgrade                    732.77      734.61  -0.25%   -3.80%
 Sofia                       573.51      573.51   +0.00   -3.52%
                                                      %  
                        BONDS                                   
                        Yield        Yield       Spread  Daily
                        (bid)        change      vs      change
                                                 Bund    in
 Czech                                                   spread
 Republic                                                
   2-year                    1.6190     -0.0150   +226b    -1bps
                                                     ps  
   5-year                    1.6900      0.0350   +221b    +3bps
                                                     ps  
                             1.7840     -0.0350   +190b    -4bps
 10-year                                             ps  
 Poland                                                         
   2-year                    1.6730      0.0030   +231b    +1bps
                                                     ps  
   5-year                    2.1860     -0.0070   +271b    -1bps
                                                     ps  
                             2.8220     -0.0020   +294b    -1bps
 10-year                                             ps  
           FORWARD      RATE         AGREEMENT                  
                        3x6          6x9         9x12    3M
                                                         interba
                                                         nk
 Czech             <PR         2.20        2.16    2.11     2.20
 Rep       IBOR=>                                        
 Hungary           <BU         0.37        0.56    0.73     0.20
           BOR=>                                         
 Poland            <WI         1.73        1.74    1.75     1.72
           BOR=>                                         
 Note:     are for ask prices                                   
 FRA                                                     
 quotes                                                  
 

 (Additional reporting by Jason Hovet, Editing by William
Maclean)
  
 
 
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