* CEE currencies track retreat of euro on Italian budget
tension
* Czech crown hits multi-month lows vs euro and forint
* Polish bank scandal seen weighing on zloty -analysts
By Sandor Peto
BUDAPEST, Nov 20 (Reuters) - The forint weakened as
expectations for hawkish comments from the Hungarian central
bank's meeting on Tuesday did not offset worries over Italy's
tension over its 2019 budget with Brussels.
Italian government bond yields rose to a one-month high
, souring sentiment in European markets.
Hungarian bonds did not track the sell-off, but the euro's
resulting retreat weakened Central European currencies
through buying of the dollar.
The forint initially gained against the euro,
approaching three-month highs, helped by some expectation that
the central bank would cite a rise in inflation and suggest
future rate tightening, while holding rates at record lows.
When the euro retreated after strengthening for over a week,
the forint also changed direction.
By 0923 GMT it had eased 0.1 percent, in tandem with the
zloty and the leu, trading at 321.72 against
the euro.
"Inflation (at 3.8 percent in October in annual terms) is
still within the (2-4 percent) target. They may want a strong
year-end forint, but they also want more lending (in the
economy)," one Budapest-based currency dealer said. "So I do not
think that they will refer to interest rate increases."
The forint has been supported by Central Europe's robust
economic growth, Hungary's trade surpluses and hopes for
upgrades in the country's sovereign credit rating.
Dollar buying amid Federal Reserve rate hikes caused
repeated forint and zloty weakening this year, and recently the
crown joined them despite four straight interest rate
hikes by the Czech central bank.
Against the forint, the crown reached its
weakest level in almost six months.
Pressure on the crown is unlikely to ease for the rest of
the year as Czech economic growth lagged behind its regional
peers in the third quarter, Raiffeisen analysts said in a note.
It is also under pressure from seasonal euro buying by banks
that cut crown deposits at the end of the year to reduce
payments into the state-run "Resolution Fund", the note added.
The zloty could remain under pressure because a corruption
scandal "may seriously undermine confidence amongst foreign
investors in country's financial industry if not thoroughly
investigated," Rabobank said in a note.
The head of the financial markets regulator KNF, Marek
Chrzanowski, stepped down a week ago after the owner of Getin
Noble Bank, Leszek Czarnecki, accused him of trying to
extract a multi-million-dollar bribe from him. Chrzanowski
denies the accusations.
CEE SNAPSHOT AT
MARKETS 1023 CET
CURRENCI
ES
Latest Previous Daily Change
bid close change in 2018
Czech <EURCZK= 26.0800 26.0280 -0.20% -2.06%
crown >
Hungary <EURHUF= 321.7200 321.3000 -0.13% -3.36%
forint >
Polish <EURPLN= 4.3370 4.3320 -0.12% -3.70%
zloty >
Romanian <EURRON= 4.6675 4.6640 -0.07% +0.26%
leu >
Croatian <EURHRK= 7.4245 7.4275 +0.04% +0.08%
kuna >
Serbian <EURRSD= 118.2000 118.2700 +0.06% +0.25%
dinar >
Note: calculated from 1800 CET
daily
change
Latest Previous Daily Change
close change in 2018
Prague 1068.17 1079.180 -1.02% -0.93%
0
Budapest 39118.74 39323.01 -0.52% -0.66%
Warsaw 2182.46 2189.73 -0.33% -11.33%
Bucharest 8540.50 8566.30 -0.30% +10.15%
Ljubljana <.SBITOP 817.07 817.66 -0.07% +1.33%
>
Zagreb 1744.08 1747.23 -0.18% -5.36%
Belgrade <.BELEX1 743.90 744.87 -0.13% -2.09%
5>
Sofia 584.08 592.68 -1.45% -13.78%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
2-year <CZ2YT=R 1.6230 0.1230 +228bps +14bps
R>
5-year <CZ5YT=R 1.8430 0.0050 +208bps +2bps
R>
10-year <CZ10YT= 2.0660 0.0000 +171bps +2bps
RR>
Poland
2-year <PL2YT=R 1.5870 -0.0160 +224bps +0bps
R>
5-year <PL5YT=R 2.4700 -0.0040 +271bps +2bps
R>
10-year <PL10YT= 3.2360 0.0010 +288bps +2bps
RR>
FORWARD RATE AGREEMEN
T
3x6 6x9 9x12 3M
interban
k
Czech Rep 2.22 2.36 2.46 2.00
<PRIBOR=
>
Hungary 0.30 0.57 0.90 0.13
Poland 1.77 1.81 1.86 1.72
Note: FRA are for ask prices
quotes
