* Investors eye measures from central banks
* Hungarian forint weakens to fresh all-time low vs euro
* Czech crown plunges more than 2%, Prague stocks at 11-year
low
(Adds forint at record lows, details on PM Orban, Hungary
central bank)
By Anita Komuves
BUDAPEST, March 16 (Reuters) - The Hungarian forint hit a
record low versus the euro, and the Czech crown plunged more
than 2% on Monday, as markets were pricing in potential central
bank measures in Central Europe to ease the economic impact from
the coronavirus pandemic.
The Czech crown fell 2.25% and was trading at 26.875 to the
euro. This is nearing the level that the Czech central bank
maintained in a weak crown regime between 2013-2017.
Prague stocks fell 7.61% to their lowest levels since
April 2009.
As of 1221 GMT, the Hungarian forint fell almost 1% from the
open to 342 to the euro, a fresh low. The forint plunged to its
new lows shortly after Prime Minister Viktor Orban told the
Parliament that Hungary would need monetary and fiscal tools to
tackle the expected grave economic impact from the spread of the
coronavirus.
Orban also announced that Hungary will close its borders for
international passengers, close cultural and sports events and
establishments and limit the opening hours of restaurants.
Hungarian central bank Governor Gyorgy Matolcsy said the
country must accelerate publicly funded investment projects
already approved, launch a fresh home-building programme and
focus on investments, consumption and lending to keep the
economy going.
The central bank offered 308 million euros ($344.34 million)
worth of fx swaps as forint liquidity to commercial banks at its
weekly tender, more than a week ago, it said on its NBHP page.
Equities in Budapest were down 9.5% by midday.
The Polish central bank was conducting repo operations on
Monday as an extraordinary measure to improve liquidity in the
bond market, dealers and analysts said.
Some analysts are also expecting a rate cut as early as
Tuesday. The Monetary Policy Council will hold a regular monthly
meeting on Tuesday. The Polish central bank does not take
generally rate setting decisions at regular sittings but the
extraordinary situation may require extraordinary steps,
analysts said.
Central banks around the world have cut rates and announced
stimulus measures in recent days in order to try to ease the
economic fallout from the spread of the coronavirus.
The Fed slashed interest rates to near zero, pledged
hundreds of billions of dollars in asset purchases and
backstopped foreign authorities with the offer of cheap dollar
financing. nL1N2B80FD
"FX markets in the region had priced in this Fed cut before,
that is why there are no dramatic moves in regional currencies
now," a dealer in Budapest said.
Governments across the CEE region introduced more and more
restrictions over the weekend to stop the spread of the virus.
Poland stopped international flights, Slovakia closed its
borders to foreigners and the government of Hungary shut down
schools starting from Monday. The Czech government on Friday
imposed a ban on foreigners entering the country and Czechs
traveling abroad as of Monday.
The crown has been the hardest hit local currency in recent
weeks as it had been a popular currency for foreign investors to
hold over the last couple of years, and because of growing
expectations of rate cuts in coming weeks.
Markets are pricing in about five rate cuts over the next
year.
CSOB bank said there was a chance the Czech central bank
could cut rates by up to 100 basis points at its March 26
meeting.
The bank's analysts said uncertainty will continue to impact
markets. "Markets will only be interested in one thing, how
quickly quarantine measures take effect and the daily rise of
new cases start to drop," CSOB said.
Czech central bank board member Oldrich Dedek told Reuters
on Friday he was inclined to back an interest rate cut but still
needed to consider by how much. He is the second member of the
seven-person board to back a cut.
CEE SNAPSHOT AT
MARKETS 1232 CET
CURRENCIE
S
Latest Previous Daily Change
bid close change in 2020
Czech 26.8750 26.2700 -2.25% -5.37%
crown
Hungary 341.5000 340.2900 -0.35% -3.03%
forint
Polish 4.4000 4.3751 -0.57% -3.26%
zloty
Romanian 4.8280 4.8260 -0.04% -0.82%
leu
Croatian 7.6170 7.5701 -0.62% -2.25%
kuna
Serbian 117.5900 117.7300 +0.12% -0.02%
dinar
Note: calculated from 1800 CET
daily
change
Latest Previous Daily Change
close change in 2020
Prague 762.37 825.1500 -7.61% -31.66%
Budapest 30935.05 34189.09 -9.52% -32.87%
Warsaw 1263.96 1365.97 -7.47% -41.21%
Bucharest 7159.79 7882.19 -9.16% -28.24%
Ljubljana 733.14 762.12 -3.80% -20.82%
Zagreb 1437.53 1512.15 -4.93% -28.74%
Belgrade <.BELEX15 703.50 714.24 -1.50% -12.25%
>
Sofia 421.76 447.95 -5.85% -25.76%
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
2-year <CZ2YT=RR 1.6630 0.0350 +255bps +1bps
>
5-year <CZ5YT=RR 1.5720 0.0570 +232bps +2bps
>
10-year <CZ10YT=R 1.1040 0.0000 +164bps -5bps
R>
Poland
2-year <PL2YT=RR 1.2600 -0.1690 +215bps -20bps
>
5-year <PL5YT=RR 1.7380 -0.0590 +248bps -10bps
>
10-year <PL10YT=R 1.8330 0.0000 +237bps -5bps
R>
FORWARD
3x6 6x9 9x12 3M
interban
k
Czech Rep < 1.83 1.39 0.87 2.31
PRIBOR=>
Hungary < 0.68 0.75 0.83 0.67
BUBOR=>
Poland < 1.11 0.95 0.86 1.69
WIBOR=>
Note: FRA are for ask prices
quotes
***************************************************
***********
($1 = 0.8945 euros)
(Additional reporting by Jason Hovet in Prague and Alan
Charlish in Warsaw; Editing by Kirsten Donovan and Sherry
Jacob-Phillips)
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