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CEE MARKETS-Leu regains ground as PM's ouster removes uncertainty

BUDAPEST, June 21 (Reuters) - The Romanian leu firmed up to 0.2 percent on Wednesday, edging away from 4-1/2-year lows, as Prime Minister Sorin Grindeanu's dismissal in a parliamentary no-confidence vote raised prospects of a stable governing majority. Romania's ruling leftists overwhelmingly voted to oust Grindeanu's six-month-old government on Wednesday, opening the way for a new cabinet with a comfortable parliament majority over the next few weeks. "Some political uncertainties have dissipated ... the no confidence vote revealed that there is a parliamentary majority that can support a new government, theoretically," said Ciprian Dascalu, chief economist at ING Bank in Bucharest. The Social Democrat Party (PSD) and a coalition partner withdrew support for Grindeanu a week ago saying he had failed to roll out their governing programme, leaving his fate in the balance. At 1217 GMT, the leu was 0.15 percent stronger on the day, off earlier session highs. However, recent falls still left the unit the worst performer in central Europe, down 1.2 percent since the start of the year. Other regional currencies also firmed. The forint was a shade stronger, pulling back from a one-month-low caused by Tuesday's decision by the National Bank of Hungary (NBH) to push more funds than expected from its three-month deposits into the economy to help cut borrowing costs. The NBH, seen as the most dovish central bank in central Europe, also lowered its inflation forecasts for the next two years and affirmed its readiness to ease monetary conditions further if below-target inflation persists. "This supports our call of limited HUF appreciation potential going forward as the (NBH) will remain reluctant to end its expansionary monetary policy," analysts at Raiffeisen Bank said in a note. "We would expect to see HUF underperforming its peers PLN (Polish zloty) and CZK (Czech crown) over the coming months as their central banks are expected to tighten monetary policy earlier." Before Tuesday's policy meeting, analysts polled by Reuters had forecast the Hungarian base rate staying unchanged at least until the second quarter of 2019. Czech central bank Governor Jiri Rusnok was quoted as saying on Wednesday that the strength of the crown, trading on the strong side of its former cap on its value at 27 to the euro, could be a reason for a slower rise in interest rates.

A currency dealer said the crown was likely to stay in a range between 26.150-26.450 in the coming days.

CEE MARKETS SNAPSH AT 1417 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.260 26.339 +0.30 2.84% 0 0 % Hungary 309.05 309.16 +0.04 -0.07% forint 00 50 % Polish zloty 4.2360 4.2445 +0.20 3.96%

%

Romanian leu 4.5905 4.5975 +0.15 -1.21%

%

Croatian 7.4180 7.4195 +0.02 1.85% kuna % Serbian 121.62 121.79 +0.14 1.42% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 993.72 998.21 -0.45% +7.82

%

Budapest 35896. 35989. -0.26% +12.1 47 69 7% Warsaw 2290.2 2302.8 -0.54% +17.5 9 3 8% Bucharest 8353.3 8376.5 -0.28% +17.9 7 0 0% Ljubljana 790.92 790.35 +0.07 +10.2 % 2% Zagreb 1855.8 1856.0 -0.01% -6.97% 1 3 Belgrade 704.04 703.95 +0.01 -1.86%

%

Sofia 683.85 687.32 -0.50% +16.6

1% BONDS

Yield Yield Spread Daily (bid) change vs change Bund in Czech spread

Republic

2-year 0.048 0 +068b -1bps

ps

5-year -0.031 0.012 +036b +0bps

ps

10-year 0.935 0.04 +067b +4bps

ps Poland

2-year 1.955 -0.06 +258b -7bps

ps

5-year 2.627 -0.016 +302b -3bps

ps

10-year 3.207 0.039 +294b +4bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.34 0.41 0.5 0

IBOR=>

Hungary <BU 0.19 0.215 0.255 0.15

BOR=>

Poland <WI 1.75 1.764 1.793 1.73

BOR=>

Note: FRA are for ask quotes prices ******************************************************** *****

(Reporting by Luiza Ilie and Radu-Sorin Marinas; Writing by Gergely Szakacs; Editing by Andrew Heavens and Pritha Sarkar)