November 29, 2019 / 12:05 PM / 7 months ago

CEE MARKETS-Zloty hit by Swiss franc mortgage ruling

    WARSAW, Nov 29 (Reuters) - The Polish zloty
continued to weaken on Friday after a Polish Supreme Court
verdict that investors fear raises the risk that Swiss franc
mortgage loans will be converted into the local currency on
terms unfavourable to banks.
    Other regional currencies gained, with Hungary's forint and
Romania's leu rebounding after hitting new record lows against
the euro this week. 
    The Czech crown pushed higher after a slight upward revision
in third-quarter growth data indicated the region was still
holding up despite a slowdown in western markets.
    Poland's Supreme Court ruled on Thursday in a case brought
by a bank against one of thousands of Poles who took out Swiss
franc-denominated mortgages that have become prohibitively
expensive to service after the franc soared in value. 
    Overturning an Appeals Court verdict after an Oct. 3 ruling
by the European Union's top court, it said it could be possible
to convert the loan into zloty while keeping the original
interest rate, an outcome seen as unfavourable for lenders. 
    The zloty was down 0.1% on the day at 4.326 per euro at 1046
GMT, after having touched 4.3247 on Thursday after the verdict.
    "The Supreme Court's judgment reminded investors of the
problem of foreign exchange mortgages at a rather unfortunate
time -- after breaking 4.30," ING analysts said in a note.
    "With low pre-Christmas volatility, this raises the risk of
the pair reaching another resistance at 4.35 even next week."
    The Hungarian forint rebounded after hitting a
record low against the euro on Thursday, gaining 0.6% to 333.90
per euro.
    Thin trading on the long Thanksgiving weekend meant lower
volumes were having an outsized effect, a Budapest-based dealer
said, adding: "People are out buying LED TV's, they don't buy FX
right now."
    The Czech crown firmed 0.1% to 25.542 to the euro
while the Romanian leu strengthened 0.3% to 4.7785.
    Czech economic growth slowed somewhat in the third quarter,
revised data showed on Friday, although analysts said it was
still holding up well despite the slowdown in external markets
like Germany.
    Analysts expected the data would keep the central bank in
wait-and-see mode, even as it is among the few European monetary
bodies still debating whether a rate hike is still needed to get
ahead of domestic inflationary pressures.
    Governor Jiri Rusnok said in an interview with news website published on Friday that there was high likelihood
of rate stability ahead.
    "Today's data are an argument against raising interest
rates," Komercni Banka senior economist Michale Brozka said.
    The region's growth leaders Hungary and Poland published
third-quarter gross domestic product data that was matched first
    "As the data is in line with the Polish Monetary Policy
Council's (MPC) expectations and inflation remains in the NBP's
target range, they will not affect the MPC's interest rate
decisions in the coming months," Bank Pocztowy Chief Economist
Monika Kurtek said in a note.
    Stock markets were down, hit by fears that Chinese
retaliation against a U.S. law backing Hong Kong protesters
could threaten to derail negotiations on a trade truce between
the two countries. 
    Prague's PX index was down 0.30% while Budapest's main
index fell 0.29%.
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1146              
                            Latest   Previou  Daily    Change
                            bid      close    change   in 2019
 EURCZK  Czech     <EURCZK  25.5420  25.5715   +0.12%   +0.65%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  333.900  336.025   +0.64%   -3.84%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.3260   4.3216   -0.10%   -0.84%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.7785   4.7925   +0.29%   -2.61%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.4355   7.4373   +0.02%   -0.34%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.500  117.610   +0.09%   +0.68%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
                            Latest   Previou  Daily    Change
                                     close    change   in 2019
 .PX     Prague             1081.16  1083.82   -0.25%   +9.59%
 .BUX    Budapest           43652.1  43799.8   -0.34%   +11.53
                                  4        5                 %
 .WIG20  Warsaw    <.WIG20  2168.09  2169.09   -0.05%   -4.77%
 .BETI   Buchares           9871.16  9869.45   +0.02%   +33.69
         t                                                   %
 .SBITO  Ljubljan  <.SBITO   894.16   895.10   -0.11%   +11.18
 P       a         P>                                        %
 .CRBEX  Zagreb    <.CRBEX  1993.02  1994.64   -0.08%   +13.96
                   >                                         %
 .BELEX  Belgrade  <.BELEX   774.15   771.55   +0.34%   +1.64%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   543.76   543.36   +0.07%   -8.53%
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
         Czech                                         spread
 CZ2YT=    2-year  <CZ2YT=   1.4450   0.0510   +208bp    +5bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.2920   0.0680   +190bp    +7bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.4590  -0.0180   +183bp    -2bps
 =RR     10-year   =RR>                             s  
 PL2YT=    2-year  <PL2YT=   1.3730  -0.0220   +201bp    -3bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.7220  -0.0230   +233bp    -2bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.9680  -0.0260   +234bp    -2bps
 =RR     10-year   =RR>                             s  
                   FORWARD  RATE     AGREEME                  
                            3x6      6x9      9x12     3M
         Czech     <CZKFRA     2.23     2.23     2.16     2.18
         Rep       ><PRIBO                             
         Hungary   <HUFFRA     0.24     0.25     0.28     0.17
         Poland    <PLNFRA     1.72     1.68     1.64     1.71
         Note:     are for ask                                
         FRA       prices                              
0 : 0
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