Categories
Economy

CEE MARKETS-Czech crown extends losses after sharp rate cut, other assets mixed

 (Updates markets, adds Czech rates and bond tender)
    BUCHAREST, March 26 (Reuters) - The Czech crown extended
losses after the central bank cut interest rates more than
expected on Thursday while the country's finance ministry sold
huge amounts in debt tenders for a second day as it ramps up
borrowing amid the coronavirus outbreak.
    Other currencies and stocks across the region were mixed,
with investors caught between fears of a global recession and
hopes of stimulus measures.
    The Czech National Bank cut its main interest rate by 75
basis points, following a surprise cut it delivered last week.

    The Czech, Polish and Romanian central banks have cut their
benchmark rates and announced further measures to shore up
economic activity damaged by restrictions and closures aimed at
curbing the coronavirus outbreak.
    A wide majority of analysts polled by Reuters had expected
Czech policymakers to cut rates by half a percentage point.

    "As the impact of the coronavirus crisis on economic
activity becomes clearer, we expect the central bank to deliver
another 50bp rate cut to near-zero over the coming months and
possibly commence sovereign bond purchases," Capital Economics
said in a statement.
    By 1330 GMT, the Czech crown extended losses to
trade 0.4% lower against the euro at 27.5850. 
    Analysts see a chance that the central bank could be active
in the secondary debt market after legislation widening the
assets it can buy - currently limited to maturities of up to one
year - goes through parliament next month.
    On Thursday, the Czech finance ministry sold a massive 68.56
billion crowns ($2.74 billion) in 52-week Treasury bills,
meeting most demand for the short-term paper a day after seeing
record bids at an auction for state bonds. 
    "People are looking to offload cash in anticipation of (the
central bank) easing during the year," a trader said in
reference to the T-bill result.
    Elsewhere in the region, the Hungarian forint was
down 0.3% against the euro at 355.0500. 
    Hungary may have to raise its budget deficit target this
year as the government revises its 2020 budget to cope with the
coronavirus outbreak, finance minister Mihaly Varga said on
Thursday.
    Hungary has kept is budget deficit well below the European
Union's limit - 3% of gross domestic product - in recent years
as Viktor Orban's government worked to wrestle down some of the
largest debt in central Europe.
    "The 2020 Hungarian budget has substantial reserves, so we
have resources to tap now as trouble has reared its head," 
Varga said in a post on his Facebook page on Thursday.
    "However, if this is not enough, sticking staunchly to a
deficit below 3% would be a mistake."
    The Monetary Council left interest rates on hold on Tuesday
and moved to pump more money into the banking system by
introducing a massive fixed-rate collateralised loan instrument.

    It provided 43.1 billion forints ($132.06 million) worth of
funds to banks at its first collateralised loan tender on
Wednesday, offering liquidity to banks at a fixed rate of 0.9%,
it said.
    Romania, too, was likely to raise its deficit target at a
budget revision in April, its finance minister said, but unlike
its Hungarian neighbour, Bucharest is already running a deficit
above EU limits, leaving it more vulnerable to investor flight.
    On Thursday, the ministry said it plans to tap foreign
markets for further issues worth 10 billion euros ($10.9
billion) by 2022.
    The Romanian leu was flat against the euro, while
the Polish zloty reversed course to trade 0.2% higher
versus the euro at 4.5650.
    The Polish central bank bought back treasury bonds worth
over 10 billion zlotys ($2.41 billion) at its third buyback
operation.
    Prague's bluechip index fell 1.0% on the day, while
Bucharest's was flat and Hungary and Poland's
 rose 0.7% and 1.0%, respectively.    
    
            CEE       SNAPSHO   AT                      
            MARKETS   T        1404              
                               CET               
                      CURRENC                           
                      IES                        
                      Latest   Previou  Daily    Change
                               s                 
                      bid      close    change   in 2020
 Czech      <EURCZK=  27.5850  27.4690   -0.42%   -7.80%
 crown      >                                    
 Hungary    <EURHUF=  355.050  353.920   -0.32%   -6.73%
 forint     >               0        0           
 Polish     <EURPLN=   4.5650   4.5726   +0.17%   -6.76%
 zloty      >                                    
 Romanian   <EURRON=   4.8330   4.8350   +0.04%   -0.92%
 leu        >                                    
 Croatian   <EURHRK=   7.6095   7.6119   +0.03%   -2.16%
 kuna       >                                    
 Serbian    <EURRSD=  117.400  117.460   +0.05%   +0.14%
 dinar      >               0        0           
 Note:      calculated from             1800            
 daily                                  CET      
 change                                          
                                                        
                      Latest   Previou  Daily    Change
                               s                 
                               close    change   in 2020
 Prague                798.64  807.650   -1.12%  -28.41%
                                     0           
 Budapest             32952.2  32690.4   +0.80%  -28.49%
                            2        5           
 Warsaw               1456.09  1441.83   +0.99%  -32.28%
 Bucharest            7615.45  7621.00   -0.07%  -23.67%
 Ljubljana  <.SBITOP   725.27   727.51   -0.31%  -21.67%
            >                                    
 Zagreb               1428.83  1423.61   +0.37%  -29.18%
 Belgrade   <.BELEX1   638.63   629.80   +1.40%  -20.34%
            5>                                   
 Sofia                 421.29   426.13   -1.14%  -25.85%
                                                        
                      Yield    Yield    Spread   Daily
                      (bid)    change   vs Bund  change
                                                 in
 Czech                                           spread
 Republic                                        
   2-year   <CZ2YT=R   1.0580  -0.1640   +167bp   -15bps
            R>                                s  
   5-year   <CZ5YT=R   1.4620   0.0230   +199bp    +8bps
            R>                                s  
   10-year  <CZ10YT=   1.7910   0.1730   +213bp   +22bps
            RR>                               s  
 Poland                                                 
   2-year   <PL2YT=R   0.9130  -0.0620   +153bp    -5bps
            R>                                s  
   5-year   <PL5YT=R   1.2620  -0.0540   +179bp    +0bps
            R>                                s  
   10-year  <PL10YT=   1.7750  -0.0730   +212bp    -2bps
            RR>                               s  
            FORWARD                                     
                      3x6      6x9      9x12     3M
                                                 interba
                                                 nk
 Czech Rep               0.62     0.47     0.41     1.72
            <PRIBOR=                             
            >                                    
 Hungary                 0.33     0.35     0.35     0.47
                                                 
 Poland                  0.68     0.51     0.48     1.17
                                                 
 Note: FRA  are for ask                                 
 quotes     prices                               
 **********************************************         
 ****************                                
 

($1 = 4.1526 zlotys)

 (Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,
Alan Charlish in Warsaw and Anita Komuves in Budapest; editing
by Larry King and Susan Fenton)
  
 
 

Source: Read Full Article

Categories
Economy

CEE MARKETS-Currencies weaker, Czech central bank seen cutting rates

    BUCHAREST, March 26 (Reuters) - Central European currencies
weakened against the euro on Thursday as fears of a global
recession overtook stimulus measures, while the Czech central
bank was expected to further cut interest rates.
    Analysts polled by Reuters widely expect The Czech National
Bank to cut rates by another 50 basis points later on Thursday,
following another half-percentage-point cut earlier this month,
as it seeks to soften the economic blow from the coronavirus
outbreak.
    Questions remain on the central bank's next moves as markets
price in aggressive rate cuts in the months ahead. CSOB analysts
said the bank is unlikely to be as aggressive. 
    "Quick moves could start new volatility amid low liquidity
and quicken the outflow of capital abroad," the bank said.
    Markets also see chances the central bank could be active in
the secondary market after legislation widening the assets it
can buy - currently limited to maturities of up to one year -
goes through parliament next month.
    "EUR/CZK price action will fully depend on how the central
bank will or will not communicate the QE," ING bank said in a
statement.
    By  0910 GMT, the Czech crown traded 0.2 percent
down against the euro at 27.5300.
    So far, potential quantitative easing plans have supported
markets, and analysts said they helped boost demand at a state
bond auction on Wednesday, where several times more debt than
planned was sold.
    Elsewhere in the region, the Hungarian forint was
down 0.5% against the euro at 355.7800. 
    Hungary may have to raise its budget deficit target this
year as the government revises its 2020 budget to cope with the
coronavirus outbreak, the finance minister said on Thursday.
    Hungary has kept is budget deficit well below the European
Union's limit -- 3% of gross domestic product -- in recent years
as Orban's government worked to wrestle down some of the largest
debt in central Europe.
    "The 2020 Hungarian budget has substantial reserves, so we
have resources to tap now as trouble has reared its head," 
Mihaly Varga said in a post on his Facebook page on Thursday.
    "However, if this is not enough, sticking staunchly to a
deficit below 3% would be a mistake."
    The Monetary Council left interest rates on hold on Tuesday
and moved to pump more money into the banking system by
introducing a massive fixed-rate collateralised loan instrument.

    It provided 43.1 billion forints ($132.06 million) worth of
funds to banks at its first collateralised loan tender on
Wednesday, offering liquidity to banks at a fixed rate of 0.9%,
it said.
    The Czech, Polish and Romanian central banks have cut their
benchmark rates and announced further measures to shore up
economic activity. 
    Romania too was likely to raise its deficit target at a
budget revision in April, the finance minister said, but unlike
its Hungarian neighbour, Bucharest is already running a deficit
above EU limits, leaving it more vulnerable to investor flight.
    On Thursday, the ministry said it plans to tap foreign
markets for further issues worth 10 billion euros ($10.9
billion) by 2022.
    The Romanian leu was down 0.1% versus the euro, as
was the Polish zloty, which traded at 4.5773.
    Poland's central bank will carry out its third treasury bond
buy-back operation later on Thursday.
    
            CEE       SNAPSHO   AT                      
            MARKETS   T        0950              
                               CET               
                      CURRENC                           
                      IES                        
                      Latest   Previou  Daily    Change
                               s                 
                      bid      close    change   in 2020
 Czech      <EURCZK=  27.5300  27.4690   -0.22%   -7.62%
 crown      >                                    
 Hungary    <EURHUF=  355.780  353.920   -0.52%   -6.92%
 forint     >               0        0           
 Polish     <EURPLN=   4.5773   4.5726   -0.10%   -7.01%
 zloty      >                                    
 Romanian   <EURRON=   4.8377   4.8350   -0.06%   -1.02%
 leu        >                                    
 Croatian   <EURHRK=   7.6060   7.6119   +0.08%   -2.11%
 kuna       >                                    
 Serbian    <EURRSD=  117.420  117.460   +0.03%   +0.13%
 dinar      >               0        0           
 Note:      calculated from             1800            
 daily                                  CET      
 change                                          
                                                        
                      Latest   Previou  Daily    Change
                               s                 
                               close    change   in 2020
 Prague                801.85  807.650   -0.72%  -28.13%
                                     0           
 Budapest             32882.2  32690.4   +0.59%  -28.65%
                            4        5           
 Warsaw               1443.87  1441.83   +0.14%  -32.85%
 Bucharest            7598.80  7621.00   -0.29%  -23.84%
 Ljubljana  <.SBITOP   720.90   727.51   -0.91%  -22.14%
            >                                    
 Zagreb               1408.33  1423.61   -1.07%  -30.19%
 Belgrade   <.BELEX1   641.67   629.80   +1.88%  -19.96%
            5>                                   
 Sofia                 423.66   426.13   -0.58%  -25.43%
                                                        
                      Yield    Yield    Spread   Daily
                      (bid)    change   vs Bund  change
                                                 in
 Czech                                           spread
 Republic                                        
   2-year   <CZ2YT=R   1.2350   0.0120   +183bp    +1bps
            R>                                s  
   5-year   <CZ5YT=R   1.5210   0.0810   +202bp   +10bps
            R>                                s  
   10-year  <CZ10YT=   1.8300   0.2110   +214bp   +23bps
            RR>                               s  
 Poland                                                 
   2-year   <PL2YT=R   0.9030  -0.0720   +150bp    -8bps
            R>                                s  
   5-year   <PL5YT=R   1.2830  -0.0330   +178bp    -1bps
            R>                                s  
   10-year  <PL10YT=   1.8040  -0.0440   +211bp    -3bps
            RR>                               s  
            FORWARD                                     
                      3x6      6x9      9x12     3M
                                                 interba
                                                 nk
 Czech Rep               0.62     0.47     0.41     1.74
            <PRIBOR=                             
            >                                    
 Hungary                 0.32     0.29     0.31     0.50
                                                 
 Poland                  0.61     0.48     0.47     1.17
                                                 
 Note: FRA  are for ask                                 
 quotes     prices                               
 **********************************************         
 ****************                                
 
 (Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,
Alan Charlish in Warsaw and Anita Komuves in Budapest; editing
by Larry King)
  
 
 

Source: Read Full Article

Categories
Economy

UPDATE 1-CEE MARKETS-Stocks, currencies plunge as Central Europe shuts doors to fight virus

    * 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)
  
 
 

Source: Read Full Article