September 23, 2019 / 9:42 AM / 6 months ago

CEE MARKETS-Forint touches all-time low as weak German data sours mood

    PRAGUE, Sept 23 (Reuters) - The Hungarian forint slipped to
a record low against the euro on Monday as weak German
manufacturing sentiment weighed on central Europe's currencies
and markets awaited monetary policy decisions in the region.
    Hungary's central bank meets on Tuesday followed by a Czech
rate setters' meeting on Wednesday, with both expected to keep
main interest rates on hold despite the European Central Bank
and the U.S. Federal Reserve's policy easing.
    Central Europe's economies have so far weathered a softening
economy in the euro zone - the region's main trading partner -
and global trade tensions to post solid growth this year,
keeping inflation pressures up.
    But data from Germany showing private sector activity shrank
for the first time in 6-1/2 years in September weighed on
sentiment in the region as investors worried about its outlook.
    "Data published this morning clearly show that the German
economy will enter a recession, or has already done so," a
Budapest trader said.
    "Global sentiment is poor, which weighs on trade this
morning. This is not a forint-specific move." 
    The forint weakened to as low as 335.40 against
the euro before trimming losses to bid at 334.90 by 0858 GMT,
down 0.3%.
    "It remains to be seen what the Hungarian central bank will
communicate (on Tuesday). If it were to loosen monetary
conditions even further, we could very easily post further
losses," the trader said.
    Analysts expect Hungary to keep its base interest rate at
0.9%, the lowest in the region.
    The Polish zloty dropped 0.3% to 4.389 to the
euro, touching its lowest level so far in September and nearing
a 14-month low. 
    The Czech crown lost 0.1%, hovering around 25.90
to the euro, while Romania's leu gained nearly 0.1%.
    Romania will seek to sell 600 million leu worth of 2024
treasury bonds on Monday after rejecting bids for longer-dated
paper at earlier auctions this month. 
    The 2024 bond was bid 7 basis points up at a mid-yield of
3.90% on Monday morning. 
    "The (June 2024) tenor looks suitable for a broad range of
investors," ING said. "The failed 15-year auction from last
Thursday might have dented confidence a bit but we still expect
reasonable demand for today and an average yield around 3.85%."
    Elsewhere, stock markets headed south, with Prague and
Warsaw both down around 1.2%. In Budapest, OTB Bank
 lost 1.3% after touching a near 5-month high on
                                CEE MARKETS        SNAPSHOT    AT                        
                                                                 1058 CET                
                                                   Latest      Previous        Daily     Change
                                                   bid         close           change    in 2019
 EURCZK=    Czech crown                            25.8900     25.8650         -0.10%    -0.71%
 EURHUF=    Hungary forint                         334.9000    333.7600        -0.34%    -4.13%
 EURPLN=    Polish zloty                           4.3895      4.3740          -0.35%    -2.28%
 EURRON=    Romanian leu                           4.7516      4.7542          +0.05%    -2.05%
 EURHRK=    Croatian kuna                          7.4040      7.4003          -0.05%    +0.08%
 EURRSD=    Serbian dinar                          117.3900    117.6200        +0.20%    +0.78%
            Note: daily change  calculated from                                1800 CET  
                                                   Latest      Previous        Daily     Change
                                                               close           change    in 2019
 .PX        Prague                                 1046.92     1060.3200       -1.26%    +6.12%
 .BUX       Budapest                               40799.71    41116.92        -0.77%    +4.24%
 .WIG20     Warsaw                                 2144.22     2171.75         -1.27%    -5.82%
 .BETI      Bucharest                              9457.07     9441.69         +0.16%    +28.08%
 .SBITOP    Ljubljana                              854.91      856.96          -0.24%    +6.30%
 .CRBEX     Zagreb                                 1903.53     1899.75         +0.20%    +8.85%
 .BELEX15   Belgrade                               754.04      755.68          -0.22%    -1.00%
 .SOFIX     Sofia                                  572.86      572.86          +0.00%    -3.63%
                                                   Yield       Yield           Spread    Daily
                                                   (bid)       change          vs Bund   change in
            Czech Republic                                                               spread
 CZ2YT=RR   2-year                                 1.3490      -0.0230         +207bps   -1bps
 CZ5YT=RR   5-year                                 1.0900      -0.0840         +185bps   -5bps
 CZ10YT=RR  10-year                                1.3650      -0.0060         +195bps   +6bps
 PL2YT=RR   2-year                                 1.4660      -0.0010         +218bps   +1bps
 PL5YT=RR   5-year                                 1.8000      -0.0010         +256bps   +3bps
 PL10YT=RR  10-year                                2.0320      -0.0060         +261bps   +6bps
                                FORWARD            RATE        AGREEMENT                 
                                                   3x6         6x9             9x12      3M interbank
            Czech Rep                              2.16        2.09            1.97      2.14
            Hungary                                0.28        0.33            0.37      0.00
            Poland                                 1.75        1.72            1.68      1.72
            Note: FRA quotes    are for ask prices                                       
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