Wires

CEE MARKETS-Zloty leads FX losses, ECJ ruling may pressure Polish banks

0930 GMT, the zloty eased 0.3% to trade at

BUCHAREST, Oct 7 (Reuters) - Central European currencies edged lower on Monday, led by the zloty, following a consumer-friendly court ruling on Polish mortgages held in Swiss francs that has raised concerns over the impact on Polish banks. The European Court of Justice (ECJ) ruled last Thursday that consumers may ask courts to convert their mortgage loans into the zloty currency, raising the prospect of Polish banks having to refund customers. "This week, the exchange rate should fluctuate around 4.35 (zlotys to the euro). The ruling is likely to result in an increase in the number of court cases. This means a permanent pressure on the zloty," ING said in a note. Economists expect this to force banks to establish reserves gradually and partially hedge positions resulting from a possible revaluation of loans. Rate-setter Eugeniusz Gatnar, who said the ruling would not have any major negative impact on the stability of the banking sector, estimated that Polish banks would face costs of 20 billion to 30 billion zlotys ($5.1-$7.6 billion). Poland is also facing a parliamentary election next Sunday but this should not lead to further volatility for the local currency, ING added. 4.3318 to the euro. The Hungarian forint and the Czech crown were both 0.2% weaker against the common currency, while the Romanian leu was flat on the day. A Reuters poll showed Central Europe's leading currencies should firm over the next year, lifted by solid growth once global worries have calmed, although the expected gains will be less than previously forecast. Elsewhere, Czech industrial output fell by a less than expected 1.2% year-on-year in August, as firm car production helped to offset a drop in the manufacturing of computer and electronic products, statistics office data showed. Analysts said the data was unlikely to encourage the Czech central bank to raise rates next month. "While we find industrial data is not so bad... we find the new data does not support (a move by) the CNB to hike rates in November," said Citi economist Jaromir Sindel.

CEE MARKETS SNAPSHO ATT 1110

CET CURRENC IES

Latest Previou Daily Change

s

bid close change in 2019Czech 25.7590 25.7290 -0.12% -0.20%

crown

Hungary 333.000 332.500 -0.15% -3.58%forint 0 0Polish 4.3340 4.3200 -0.32% -1.02%

zloty

Romanian 4.7466 4.7469 +0.01 -1.95%leu %Croatian 7.4210 7.4195 -0.02% -0.15%

kuna

Serbian 117.490 117.520 +0.03 +0.69%dinar 0 0 %Note: calculated from 1800daily CET

change

Latest Previou Daily Change

s

close change in 2019Prague 1004.25 1004.56 -0.03% +1.79%

00

Budapest 39812.8 39826.5 -0.03% +1.72%8 1Warsaw 2116.28 2121.16 -0.23% -7.04%Bucharest 9467.31 9441.52 +0.27 +28.22%

%

Ljubljana 864.30 862.56 +0.20 +7.47%

%

Zagreb 1926.69 1926.57 +0.01 +10.17%

%

Belgrade 746.31 747.71 -0.19% -2.02%Sofia 563.13 563.02 +0.02 -5.27%

% BONDS

Yield Yield Spread Daily(bid) change vs change in

Bund

Czech spread

Republic

2-year 1.2720 -0.0030 +203b +0bps

ps

5-year 1.0500 -0.0790 +187b -7bps

ps

10-year 1.2860 0.0010 +188b +1bps

ps Poland

2-year 1.4830 -0.0120 +224b -1bps

ps

5-year 1.6330 -0.0230 +245b -2bps

ps

10-year 1.8810 -0.0220 +248b -1bps

ps

FORWARD RATE AGREEME

NT

3x6 6x9 9x12 3M

interbank

Czech Rep <PR 2.25 2.20 2.05 2.17

IBOR=>

Hungary <BU 0.26 0.28 0.30 0.21

BOR=>

Poland <WI 1.73 1.70 1.67 1.72

BOR=>

Note: FRA are for ask prices

quotes

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(Additional reporting by Alicja Ptak in Warsaw and Jason Hovet in Prague; Editing by Gareth Jones)