March 19, 2019 / 10:44 AM / 2 months ago

CEE MARKETS-Forint outperforms, Czech rate hike bets fade

    * Forint is buoyed by monetary tightening expectations
    * Crown is off 12-day high; rate hike bets are reduced
    * Budapest stocks set record high as OTP Bank rise further

    By Sandor Peto
    BUDAPEST, March 19 (Reuters) - The forint tested
10-month highs on Tuesday, buoyed by expectations that the
National Bank of Hungary ill tighten policy for the first time
in seven years next week.
    The forint was up 0.1 percent against the euro
at 313.75 by 0919 GMT. 
    "The forint is lifted by expectations that the NBH will
increase the bottom of its rate corridor slightly next week,"
one Budapest-based currency dealer said.
    Expectations for NBH tightening, fuelled by a rise in core
inflation, has helped the forint rise 2.3 percent
from beyond 320 late last year, making it the region's best
performer in 2019.
    Czech markets have cut bets on another rate increase on
March 28, a day after the NBH's meeting and a day before
Britain's scheduled departure from the European Union.
    Forward rate agreements indicate only a slim chance of a
Czech rate increase next week, a view reinforced on Tuesday by
Czech central bank Vice-Governor Marek Mora, who said he saw
zero to one rate hikes in 2019 as most likely.
    The Czech crown was flat at 25.621 versus the
euro, off a 12-day high reached in early trade.
    The zloty was weaker against the euro at 4.292,
but still near six-week highs it set in overnight trade,
unaffected by a higher-than-expected 7.6 percent annual rise in
Polish corporate wages. 
    "We see headwinds from the global side for the next month, 
but then see a modest recovery in global economy, which should
aide the PLN together with the still-solid performance of the
domestic Polish economy," Danske Bank said in a weekly note on
emerging markets. 
    Equities gained in the region. Budapest's blue-chip index
 hit another record high, driven by OTP Bank.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1019 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6120   25.6150    +0.01%    +0.37%
 crown      >                                       
 Hungary    <EURHUF=  313.7500  314.0000    +0.08%    +2.34%
 forint     >                                       
 Polish     <EURPLN=    4.2920    4.2896    -0.06%    -0.06%
 zloty      >                                       
 Romanian   <EURRON=    4.7560    4.7551    -0.02%    -2.14%
 leu        >                                       
 Croatian   <EURHRK=    7.4155    7.4156    +0.00%    -0.07%
 kuna       >                                       
 Serbian    <EURRSD=  117.7400  118.0350    +0.25%    +0.48%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1081.13  1076.730    +0.41%    +9.59%
                                       0            
 Budapest             42276.90  42085.01    +0.46%    +8.02%
 Warsaw                2354.20   2345.84    +0.36%    +3.41%
 Bucharest             7888.72   7883.39    +0.07%    +6.84%
 Ljubljana  <.SBITOP    872.83    872.83    +0.00%    +8.53%
            >                                       
 Zagreb                1773.70   1774.12    -0.02%    +1.42%
 Belgrade   <.BELEX1    711.39    717.34    -0.83%    -6.60%
            5>                                      
 Sofia                  586.36    586.02    +0.06%    -1.36%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8640    0.0800   +239bps     +8bps
            R>                                      
   5-year   <CZ5YT=R    1.7980    0.0080   +217bps     +0bps
            R>                                      
   10-year  <CZ10YT=    1.9260    0.0030   +184bps     +0bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6300   -0.0030   +216bps     +0bps
            R>                                      
   5-year   <PL5YT=R    2.2330    0.0040   +260bps     +0bps
            R>                                      
   10-year  <PL10YT=    2.8910   -0.0020   +281bps     +0bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.19      2.25      2.27      2.03
            <PRIBOR=                                
            >                                       
 Hungary                  0.35      0.53      0.72      0.14
                                                    
 Poland                   1.74      1.74      1.73      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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