November 13, 2018 / 11:11 AM / 6 months ago

CEE MARKETS-Forint leads currencies lower, Italy-EU dispute weighs

    * Currencies ease as euro falls on Italy's budget deadline
    * Markets seek direction after 3-day losing streak 
    * Stocks tread water, but OTP Bank lifts Budapest index

    By Sandor Peto
    BUDAPEST, Nov 13 (Reuters) - Central European currencies
eased on Tuesday amid dollar buying as the euro
remained under pressure, with Italy facing a deadline from the
European Union (EU) to cut its budget deficit target.
    Flows into the dollar due to risk aversion or expectations
for more U.S. interest rate increases have often caused currency
weakness in the EU's emerging markets this year. 
    Central European currencies and stocks took a breather early
on Tuesday as investors waited for clues over direction after
three sessions of retreat that followed two weeks of gains.
    The currencies started to weaken when the euro, after an
early rebound versus the dollar, turned south again.
    The forint, the biggest gainer in the region earlier this
month, led the retreat, shedding 0.2 percent to trade at 322.9
against the euro at 1014 GMT, still not far from last week's
3-month high of 320.8.
    It also touched this month's weakest level versus the zloty
, even though its regional peer also eased somewhat
against the euro.
    Traders said there was no fresh news to justify this, with
both the Hungarian and Polish central banks expected to keep
interest rates at record lows in the next months.
    Regional currencies may face some additional pressure if
Italy does not cut its deficit goal and disagreements with
Brussels lead to further euro weakness, traders said.
    "GDP figures from the region (in the next days), if they
indeed show a slowdown, may also trigger some reaction, but only
temporarily," another trader said.
    Regional stock indexes, after an initial rise, trod water
near Monday's closing levels, except for Budapest where the main
index rose 0.7 percent.
    The sole cause of this was a 1.9 percent jump in the shares
of Hungary's OTP to 11,210 forints, after the region's
biggest independent lender reported strong earnings on Friday.
    Some investors were trying to boost the shares well above
the 11,000-forint psychological level, Equilor brokerage analyst
Zoltan Varga said.
    Belgrade's index rose 1.3 percent, lifted by a 6.2
percent increase in the shares of Komercijalna Banka,
Serbia's biggest lender, to a 3-month high.
    The stock has been volatile after Serbia four weeks ago
invited applications for a financial adviser to sell the
government's stake in the bank.   
            CEE       SNAPSHOT   AT                         
            MARKETS             1114 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.9510   25.9540    +0.01%    -1.58%
 crown      >                                       
 Hungary    <EURHUF=  322.9000  322.2000    -0.22%    -3.71%
 forint     >                                       
 Polish     <EURPLN=    4.3026    4.2997    -0.07%    -2.93%
 zloty      >                                       
 Romanian   <EURRON=    4.6590    4.6570    -0.04%    +0.44%
 leu        >                                       
 Croatian   <EURHRK=    7.4225    7.4255    +0.04%    +0.11%
 kuna       >                                       
 Serbian    <EURRSD=  118.2500  118.2700    +0.02%    +0.21%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1081.87  1081.760    +0.01%    +0.34%
 Budapest             38356.55  38108.46    +0.65%    -2.59%
 Warsaw                2228.65  NULL      #VALUE!     -9.45%
 Bucharest             8627.16   8661.23    -0.39%   +11.26%
 Ljubljana  <.SBITOP    815.32    817.69    -0.29%    +1.11%
 Zagreb                1757.51   1767.66    -0.57%    -4.63%
 Belgrade   <.BELEX1    754.37    744.56    +1.32%    -0.71%
 Sofia                  596.48    596.08    +0.07%   -11.95%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.5090    0.0290   +215bps     +4bps
   5-year   <CZ5YT=R    1.8160    0.0050   +202bps     +1bps
   10-year  <CZ10YT=    2.1110    0.0110   +172bps     +1bps
   2-year   <PL2YT=R    1.5640    0.0150   +221bps     +2bps
   5-year   <PL5YT=R    2.4560    0.0050   +266bps     +1bps
   10-year  <PL10YT=    3.2220   -0.0130   +283bps     -1bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.05      2.20      2.35      1.99
 Hungary                  0.38      0.68      1.04      0.15
 Poland                   1.77      1.81      1.90      1.72
 Note: FRA  are for ask prices                              
0 : 0
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