CEE MARKETS-Forint retreats from 28-month high as central bank signals easing

* Forint strongest since May 2015, retreats on cbank comments

* Hungarian central bank says ready for further monetary easing

* Hungarian easing would buck global trends, Czech rate hike

* Crown firms ahead of likely strong Treasury bill auction

BUDAPEST, Aug 24 (Reuters) - The forint retreated from a 28-month high against the euro on Thursday after Hungary's central bank (NBH) signaled it stands ready to loosen monetary conditions, bucking a global trend and a recent Czech central bank (CNB) rate hike. The bank, replying to questions from Reuters, said a change in the wording of its monthly statement released on Tuesday meant it "will stand ready to ease monetary conditions further using unconventional, targeted instruments". The change was that the bank dropped its previous statement's conditional clause: "if inflation remains persistently below the target". The forint, after hitting a 28-month high against the euro in early trade at 301.72, reversed course after the comments to trade down 0.1 percent at 302.95 by 0832 GMT. "Everybody in the market had expected the NBH comments like Messiah," one Budapest-based fixed income trader said. "302 was a too sensitive level to them ... they found the forint's rise too fast. "But I do not think that they will be able to stop the rise: even if it does not reach 300, it could soon firm to around 301.50," the dealer added. The NBH noted in its statement that central Europe's robust economic performance was lifting its currencies. In Thursday's comments it said the inflation-targeting regimes of the region's central banks were different in their target levels and flexibility. That was a reference to the CNB, which has the region's lowest inflation target at 2 percent, and lifted its record low main interest rate in early August in the first such move in the European Union since 2012. While the NBH, the region's most dovish central bank, struggles with a firming currency, the rate hike has failed to lift the crown from levels around 26.1 per euro. On Thursday it firmed 0.1 percent to 26.1, ahead of a Treasury bill auction which is expected to trigger strong demand as the government has said that it would not auction bills next month despite huge expiries in the August-September period. The crown is the region's top-performing currency this year. It has firmed 3.5 percent since April when the CNB removed a cap which had kept it weaker than 27 for several years. Before that move, foreign investors bought huge amounts of crowns, making the currency overbought. That hinders further gains and the bill expiries may put pressure on the currency. "The CNB hiked in August, but its forecast does not point to another hike in a year, so that might have been a disappointment for some," Viktor Zeisel, analyst at Komercni Banka, said.



Latest Previo Daily Change


bid close change in


Czech crown 26.094 26.132 +0.15 3.50% 0 0 % Hungary 302.95 302.67 -0.09% 1.94% forint 00 00 Polish zloty 4.2797 4.2832 +0.08 2.90%


Romanian leu 4.5850 4.5869 +0.04 -1.09%


Croatian 7.4125 7.4075 -0.07% 1.92%


Serbian 119.08 119.35 +0.23 3.59% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET


Latest Previo Daily Change


close change in


Prague 1031.1 1031.3 -0.02% +11.8 0 3 8% Budapest 37791. 37753. +0.10 +18.0 65 22 % 9% Warsaw 2412.6 2391.0 +0.90 +23.8 9 6 % 6% Bucharest 8345.3 8352.0 -0.08% +17.7 5 9 9% Ljubljana 823.41 821.30 +0.26 +14.7 % 5% Zagreb 1899.0 1899.7 -0.04% -4.80% 9 6 Belgrade 721.58 720.74 +0.12 +0.59 % % Sofia 725.83 723.02 +0.39 +23.7 % 7%


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


2-year -0.016 0.01 +071b +1bps


5-year 0.073 0.043 +038b +5bps


10-year 0.903 -0.024 +052b -3bps

ps Poland

2-year 1.753 -0.007 +248b -1bps


5-year 2.633 0.004 +294b +1bps


10-year 3.317 0.005 +294b +0bps



interb ank

Czech Rep <PR 0.6 0.7 0.8 0


Hungary BU 0.2 0.24 0.3 0.15


Poland <WI 1.78 1.8 1.85 1.73


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

(Additional reporting by Robert Muller in Prague; Editing by David Holmes)