CEE MARKETS-FX firmer ahead of ECB, Serbian central bank seen holding fire

* Serbian central bank seen holding fire despite slowdown

* Currencies firm, ECB seen sticking with stimulus for now

* CEE assets generally rangebound, await clues from ECB, Fed

BUDAPEST, Sept 7 (Reuters) - Central European currencies edged higher on Thursday ahead of a European Central Bank (ECB) meeting which is unlikely to make a commitment to cut the monetary stimulus that has helped buoy the region's asset prices. Serbia's central bank also meets and is seen keeping the region's highest main interest rate on hold at 4 percent despite an expected slowdown in the country's economic growth.

Growth in the European Union's eastern wing has been generally robust, and is expected to help most of the region's currencies firm in the next 12 months, a Reuters poll of analysts showed on Thursday. Only the dinar is projected to ease, shedding about 3 percent by September next year. It has been helped by seasonal foreign currency inflows in the summer including financing for infrastructure projects. It firmed 0.1 percent to 119.3 versus the euro ahead of the central bank meeting, approaching the four-year high set at 118.78 late last month. But both Prime Minister Ana Brnabic and the International Monetary Fund confirmed earlier this week that Serbia's economic growth could fall behind their projections. Brnabic also said the government may not seek a new deal with the IMF.

The central bank is still unlikely to lower its rates to help the economy, waiting for guidance from the ECB and the Federal Reserve, fearing a dinar plunge if interest rates in developed countries start to rise. "With a slowdown of the economy materializing we would then expect to see some setbacks in RSD (dinar) until year-end from current very strong levels," Raiffeisen analyst Wofgang Ernst said in a note. ECB President Mario Draghi could start laying the groundwork for a cut in monetary stimulus after Thursday's meeting, but is unlikely to make a commitment as inflation remains subdued. The forint, the zloty and the Czech crown firmed slightly, but the region's main currencies remain rangebound and stocks also moved little. Polish government bond prices gave up some of the week's gains, with their yields rising by 1-2 basis points, but Hungarian bonds were steady and well-bid. Expectations are rising that Hungary's central bank will cut its overnight deposit rate from -0.05 percent at its meeting late this month and introduce other measures to ease monetary conditions, one Budapest-based fixed income trader said. "If the ECB says something about tapering monetary stimulus ... the euro/dollar may cross 1.2 again and the forint may head towards 308 (against the euro)," the trader said.



Latest Previo Daily Change


bid close change in


Czech crown 26.100 26.108 +0.03 3.48% 0 0 % Hungary 306.15 306.48 +0.11 0.87% forint 00 50 % Polish zloty 4.2428 4.2455 +0.06 3.80%


Romanian leu 4.5975 4.5970 -0.01% -1.36% Croatian 7.4320 7.4307 -0.02% 1.66%


Serbian 119.30 119.45 +0.13 3.39% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET


Latest Previo Daily Change


close change in


Prague 1025.8 1024.9 +0.09 +11.3 4 5 % 1% Budapest 37978. 37878. +0.26 +18.6 79 86 % 7% Warsaw 2523.9 2512.4 +0.46 +29.5 3 0 % 7% Bucharest 8035.0 8015.7 +0.24 +13.4 5 3 % 1% Ljubljana 813.11 812.44 +0.08 +13.3 % 1% Zagreb 1884.0 1888.9 -0.26% -5.56% 0 0 Belgrade 730.05 727.70 +0.32 +1.77 % % Sofia 708.37 705.93 +0.35 +20.7 % 9%


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


2-year -0.049 -0.022 +067b -4bps


5-year 0.094 0 +043b -1bps


10-year 0.939 0.047 +058b +3bps

ps Poland

2-year 1.675 0.011 +239b -1bps


5-year 2.541 0.016 +288b +0bps


10-year 3.197 0.009 +284b -1bps



interb ank

Czech Rep <PR 0.69 0.79 0.88 0


Hungary <BU 0.16 0.19 0.225 0.15


Poland <WI 1.763 1.782 1.809 1.73


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

(Reporting by Sandor Peto; Editing by Mark Potter)