Wires

CEE MARKETS-Forint loses ground after central bank's dovish turn

0807 GMT, the forint was down 0.1% at 334.44

BUDAPEST, Sept 25 (Reuters) - The Hungarian forint resumed its downward trend on Wednesday, after the central bank projected lower inflation and an economic slowdown and shifted to a more dovish stance. Czech rate setters will hold a policy meeting on Wednesday, where they are expected to keep main interest rates on hold despite the European Central Bank and the U.S. Federal Reserve's policy easing. The forint bounced back from a record low against the euro on Tuesday after the central bank kept interest rates at the lowest level in Central Europe, shrugging off the slide in the currency. The bank even announced a moderate liquidity adjustment for the fourth quarter of 2019, which analysts said amounted to a mild loosening. "This suggests further forint weakening but for the time being, the 'buy on the rumor sell on the news' sentiment could work," Erste analysts said in a note. They said on a technical basis, there was room for further short-term gains but "the forint is and could remain on an easing path." Some other analysts said the forint, which slumped to an all-time low of 336.10 to the euro on Tuesday before the central bank meeting, could recover on solid economic fundamentals. "In addition, the dovish ECB and U.S. Fed should support CEE currencies going forward," Raiffeisen said in a note. The Hungarian central bank said downward inflation risks have strengthened further as the euro zone economy slows.

against the euro, off its all-time low, but weaker than 333.57 hit after the central bank's meeting on Tuesday. The Polish zloty and the Czech crown lost 0.1% each. The Czech National Bank (CNB) is likely to hold interest rates unchanged through 2020 as it balances inflationary pressures at home with policy easing and economic weakness abroad, a Reuters poll showed on Monday. Czech forward rates have stayed stable this month after having scaled back previous rate-cut expectations. The market still prices in a rate cut by the middle of 2020

Stock markets across the region headed south, with Prague , Warsaw and Budapest all trading about 1% lower at 0840 GMT, amid a worse international sentiment on trade war jitters.

CEE SNAPSHO ATMARKETS T 1007

CET CURRENC IES

Latest Previou Daily Change

s

bid close change in 2019EURCZK Czech <EURCZK 25.8860 25.8600 -0.10% -0.69%= crown =>EURHUF Hungary <EURHUF 334.440 334.200 -0.07% -3.99%= forint => 0 0EURPLN Polish <EURPLN 4.3829 4.3790 -0.09% -2.13%= zloty =>EURRON Romanian <EURRON 4.7490 4.7490 +0.00% -2.00%= leu =>EURHRK Croatian <EURHRK 7.4080 7.4035 -0.06% +0.03%= kuna =>EURRSD Serbian <EURRSD 117.370 117.605 +0.20% +0.79%= dinar => 0 0Note: calculated from 1800daily CET

change

Latest Previou Daily Change

s

close change in 2019.PX Prague 1037.45 1047.57 -0.97% +5.16%

00

.BUX Budapest 40545.4 40848.0 -0.74% +3.59%8 4.WIG20 Warsaw <.WIG20 2153.89 2175.24 -0.98% -5.39%>.BETI Buchares 9490.97 9483.43 +0.08% +28.54t %.SBITO Ljubljan <.SBITO 856.63 858.09 -0.17% +6.51%P a P>.CRBEX Zagreb <.CRBEX 1924.48 1923.06 +0.07% +10.05> %.BELEX Belgrade <.BELEX 752.96 753.45 -0.07% -1.15%15 15>.SOFIX Sofia <.SOFIX 570.40 572.20 -0.31% -4.05%>

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year <CZ2YT= 1.3570 0.0020 +208bp +1bpsRR RR> sCZ5YT= 5-year <CZ5YT= 1.0890 -0.0660 +188bp -6bpsRR RR> sCZ10YT <CZ10YT 1.3240 -0.0090 +194bp +0bps=RR 10-year =RR> s

Poland

PL2YT= 2-year <PL2YT= 1.4820 0.0040 +220bp +1bpsRR RR> sPL5YT= 5-year <PL5YT= 1.7980 -0.0230 +258bp -2bpsRR RR> sPL10YT <PL10YT 2.0390 -0.0110 +265bp +0bps=RR 10-year =RR> sFORWARD RATE AGREEME

NT

3x6 6x9 9x12 3M

interba nk

Czech <CZKFRA 2.16 2.09 1.95 2.14Rep ><PRIBO

R=>

Hungary <HUFFRA 0.28 0.27 0.37 0.21><BUBOR

=>

Poland <PLNFRA 1.72 1.70 1.66 1.72><WIBOR

=>

Note: are for askFRA prices

quotes

(Reporting by Krisztina Than in Budapest and Jason Hovet in Prague, Editing by Subhranshu Sahu)