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CEE MARKETS-Strong data fails to boost Czech crown, Serbia cuts rates again

* Serbian central bank repeats rate cut surprise, dinar eases

* Robust Czech data fail to lift crown significantly

* Hungary cbank seen keeping markets awash in money

* Romania holds bond tender, after scrapping a sale last week

(Adds Serbian rate cut, analyst comment on Romanian auction) BUDAPEST, Oct 9 (Reuters) - The Serbian dinar eased on Monday after the country's central bank cut interest rates, in its second surprise reduction in two months, while robust Czech economic data boosted expectations for a central bank rate hike there. The dinar shed 0.1 percent against the euro, to trade at 119.33 at 1019 GMT, after the bank lowered its benchmark rate by 25 basis points to 3.5 percent after a slowing in Serbian inflation. Across the region, monetary policy is diverging. Hungary's central bank cut one of its rates and announced measures to boost liquidity in forint markets, while in August the Czech central bank became the first in the European Union since 2012 to raise rates. The Czech economic data failed to lift the crown, but some of the region's other currencies and government bonds rose, recovering from a fall triggered by U.S. jobs data which has strengthened expectations for a December interest rate hike in the world's biggest economy. Czech figures released on Monday showed a fall in unemployment to a record low in September and a higher-than-expected 5.8 percent annual rise in industrial output in August. Annual inflation rose to 2.7 percent in September, the highest in five years. The figures bolstered expectations that the Czech central bank (CNB) will increase interest rates further next month. The crown eased a little further to 25.89 against the euro, after its sharp retreat on Friday following the U.S. jobs data. Last week, at 25.789 it touched its highest levels since the CNB removed a cap that had kept the crown weaker than 27 versus the euro for more than three years. The forint and the zloty recovered from Friday's lows, and government bond yields in the region mostly fell after a jump on Friday. The forint, trading at 312.10 against the euro, was off the 5-month low hit on Friday at 312.58, but near it. The Hungarian central bank (NBH) is expected to keep liquidity in forint interbank markets abundant, using Monday's weekly fx swap tender, dealers said. "In the technical sense, the forint should strengthen, but it will not," one Budapest-based trader said, adding that the NBH was likely to keep the forint weak with its dovish policies. With the European Central Bank not rushing to follow the example of the Fed's tightening, Central European rate-setters have been split. The Czechs, having the lowest inflation target in the region, have started to lift interest rates. Hungary has been easing monetary policy and the Fed rate hike expectations did not deter Serbia to cut rates further as inflation had headed lower. In Romania, where the central bank is facing a liquidity squeeze in leu markets, the government is due to hold a tender of seven-week bonds. Last week Romania rejected all bids at a tender of 2019-expiry bonds. After a surge in Romanian bond yields, the government may cancel the auction or reject the bids, ING analysts said in a note.

CEE MARKETS SNAPSH AT 1219 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.890 25.875 -0.06% 4.31% 0 0 Hungary 312.10 312.53 +0.14 -1.05% forint 00 00 % Polish zloty 4.3101 4.3109 +0.02 2.18%

%

Romanian leu 4.5780 4.5773 -0.02% -0.94% Croatian 7.4990 7.5073 +0.11 0.75% kuna % Serbian 119.33 119.22 -0.09% 3.37% 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 1058.4 1058.0 +0.03 +14.8 2 6 % 4% Budapest 37946. 37941. +0.01 +18.5 86 82 % 7% Warsaw 2484.2 2479.4 +0.19 +27.5 8 6 % 4% Bucharest 7999.9 7984.3 +0.20 +12.9 5 2 % 1% Ljubljana 808.75 799.73 +1.13 +12.7 % 0% Zagreb 1813.5 1813.2 +0.01 -9.09% 4 7 % Belgrade 725.53 726.08 -0.08% +1.14

%

Sofia 680.40 679.50 +0.13 +16.0 % 2%

BONDS

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

Republic

2-year 0.313 -0.057 +101b -6bps

ps

5-year 0.491 -0.043 +076b -4bps

ps

10-year 1.351 0.009 +090b +2bps

ps Poland

2-year 1.78 0.002 +248b +0bps

ps

5-year 2.773 0.02 +304b +2bps

ps

10-year 3.484 -0.013 +303b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.76 0.92 1.04 0

IBOR=>

Hungary <BU 0.09 0.14 0.2 0.03

BOR=>

Poland <WI 1.776 1.845 1.915 1.73

BOR=>

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

(Additional reporting by Radu Marinas in Bucharest, editing by Gareth Jones)