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CEE MARKETS-Currencies jump on dollar retreat, crown at multi-year high

* Dollar retreat boosts CEE currencies

* Polish central bank expected to hold rates

* Czech crown surges, strongest since cap lifted

BUDAPEST/WARSAW, Oct 4 (Reuters) - Central European currencies jumped on Wednesday, with the crown hitting its strongest levels in almost four years, as a retreat of the dollar triggered flows into emerging market currencies. Hungary's first euro bond issue since 2011 and expectations that the Czech Central Bank (CNB) will lift interest rates further also provided support. The CNB, worried by a rebound in inflation, in August became the first European Union central bank to lift rates since 2012.

The Polish central bank (NBP) is expected to keep rates on hold at its meeting on Wednesday and to lift them only in the fourth quarter of 2018, even though annual inflation in September was higher than expected at 2.2 percent. "We will enter a period of lower inflation on account of a high annual base," said ING economist Jakub Rybacki. "The dollar's fall seems to be most plausible explanation (for the zloty's strengthening)," he said. The zloty jumped half a percent to 4.296 against the euro by 0818 GMT, while the dollar was pulling away from seven-week highs amid speculation that Federal Reserve Chair Janet Yellen's successor will not back fast rate increases. The crown rose 0.2 percent to 25.872, and was the strongest since the CNB in April removed a cap which had kept it weaker than 27 for years. The forint gained 0.4 percent, rising to 311.05 per euro. Hungary on Wednesday opened books for a 10-year euro bond sale which will lengthen its euro bond curve by seven years. The sale should fully fund the repurchase of dollar-denominated bonds worth $1.2 billion through an offer which closed on Tuesday. A successful sale could support the forint and bonds denominated in the currency, dealers said. The leu underperformed, even though it firmed 0.1 percent to 4.582 per euro, touching 6-week highs. Apart from Czechs, Romania's central bank has been the most worried in the region over a rise in inflation, but the measures and comments it delivered on Tuesday were mixed. It said it would do all that is needed to contain inflation, but it injected 9.4 billion leus into the interbank market through a one-week repo tender, and analysts said it may continue to pump in money to ease a liquidity squeeze. The shortage pushed up the ROBOR interbank rates in the past week, prompting criticism of the central bank from Prime Minister Mihai Tudose. The three-month interbank rate rose to its highest levels since late 2014, to 1.8 percent. It retreated only marginally on Wednesday, to 1.79 percent.

CEE MARKETS SNAPSH AT 1018 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.872 25.925 +0.21 4.39% 0 5 % Hungary 311.05 312.30 +0.40 -0.72% forint 00 00 % Polish zloty 4.2960 4.3162 +0.47 2.51%

%

Romanian leu 4.5820 4.5880 +0.13 -1.03%

%

Croatian 7.4900 7.4970 +0.09 0.87% kuna % Serbian 119.06 119.23 +0.14 3.60% 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 1050.4 1051.2 -0.07% +13.9 3 0 8% Budapest 37651. 37908. -0.68% +17.6 57 57 5% Warsaw 2472.9 2469.5 +0.14 +26.9 5 1 % 5% Bucharest 7884.4 7888.0 -0.04% +11.2 9 1 8% Ljubljana 797.61 800.31 -0.34% +11.1

5%

Zagreb 1807.4 1805.2 +0.13 -9.39% 9 3 % Belgrade 721.82 721.10 +0.10 +0.62 % % Sofia 679.98 680.67 -0.10% +15.9

5% BONDS

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

Republic

2-year 0.282 0.029 +099b +4bps

ps

5-year 0.437 0.109 +073b +13bp ps s 10-year 1.332 -0.032 +089b -1bps

ps Poland

2-year 1.755 0.014 +247b +3bps

ps

5-year 2.712 0.02 +300b +4bps

ps

10-year 3.386 0.011 +294b +3bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.74 0.88 1.01 0

IBOR=>

Hungary <BU 0.07 0.11 0.14 0.03

BOR=>

Poland <WI 1.771 1.83 1.886 1.73

BOR=>

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

(Additional reporting by Luiza Ilie in Bucharest; Editing by Raissa Kasolowsky)