December 17, 2019 / 10:18 AM / 2 months ago

CEE MARKETS-Forint slips as dovish Hungarian central bank eyed for guidance

    PRAGUE, Dec 17 (Reuters) - The forint fell 0.4% on Tuesday,
weakening beyond a key level against the euro, with investors on
alert for potential changes to the Hungarian central bank's
unconventional policy toolkit.
     Other central European currencies also dropped, although
the forint led losses, while stock markets were mixed.
     Hungary's central bank, the most dovish in the region, is
expected to keep interest rates on hold on Tuesday, with a poll
seeing hardly any tightening through to the end of 2021. 
    But two central bank sources told Reuters on Friday that the
bank planned to extend its 300 billion forint ($989 million)
programme to buy corporate bonds that it launched in July, with
a decision possibly as soon as Tuesday.
    "Hungary’s central bank will probably keep interest rates
unchanged, with investors focusing on potential tweaks to the
unconventional monetary toolkit and updated economic forecasts,"
brokerage Equilor said in a note.
    Those expectations helped push the forint down to 330.55 to
the euro, past the psychological 330 level which it breached
last week. The bank will hold a news conference at 1430 GMT
after the rate decision.
    Central Europe's monetary policymakers have been stuck in a
holding pattern for several months even as the European Central
Bank and others ease policy to shore up sagging economies.
    Last month, Hungary's central bank reiterated its view that
dampening European economic activity would keep a lid on
domestic price pressures.
    The Czech central bank meets on Wednesday and is also seen
holding steady on policy despite a continuing debate on whether
another rate hike is needed to keep inflationary pressures under
control.
    The crown dipped 0.15% to 25.484 to the euro, with
forward markets pretty much pricing out chances of a rate cut in
the next year. Romania's leu eased less than 0.1%.
    Poland's zloty was down 0.05% with markets keeping
an eye out later in the day for the energy regulator's decision
on 2020 electricity prices.
    "The likely increase in electricity prices will be one of
the factors driving next year's inflation, and thus may affect
some members of the Monetary Policy Council and, indirectly, the
valuation of domestic assets," Bank Millennium said.
  
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1051              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2019
 EURCZK  Czech     <EURCZK  25.4840  25.4445   -0.15%   +0.88%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  330.550  329.125   -0.43%   -2.86%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.2608   4.2588   -0.05%   +0.68%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.7769   4.7735   -0.07%   -2.57%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.4398   7.4410   +0.02%   -0.40%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.380  117.490   +0.09%   +0.78%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2019
 .PX     Prague             1100.30  1100.02   +0.03%   +11.53
                                          00                 %
 .BUX    Budapest           45404.5  45603.9   -0.44%   +16.01
                                  3        2                 %
 .WIG20  Warsaw    <.WIG20  2121.70  2112.93   +0.42%   -6.81%
                   >                                   
 .BETI   Buchares           9927.62  9966.11   -0.39%   +34.45
         t                                                   %
 .SBITO  Ljubljan  <.SBITO   925.97   926.47   -0.05%   +15.13
 P       a         P>                                        %
 .CRBEX  Zagreb    <.CRBEX  2009.72  2012.48   -0.14%   +14.92
                   >                                         %
 .BELEX  Belgrade  <.BELEX   774.40   777.08   -0.34%   +1.67%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   547.10   545.85   +0.23%   -7.97%
                   >                                   
                            BONDS                             
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   1.5430   0.0020   +218bp    +1bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.2660  -0.0280   +181bp    -2bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.5410  -0.0190   +183bp    -1bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   1.4480   0.0200   +208bp    +3bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.7670  -0.0100   +231bp    +0bps
 RR                RR>                              s  
 PL10YT            <PL10YT   2.0280   0.0330   +231bp    +5bps
 =RR     10-year   =RR>                             s  
                   FORWARD  RATE     AGREEME                  
                                     NT                
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     2.25     2.25     2.21     2.18
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.26     0.29     0.34     0.16
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     1.72     1.67     1.64     1.70
                   ><WIBOR                             
                   =>                                  
         Note:     are for ask                                
         FRA       prices                              
         quotes                                        
         
0 : 0
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