Wires

CEE MARKETS-Forint slips to record low, leu holds on to gains

Jason Hovet and Krisztina Than

PRAGUE/BUDAPEST, Nov 26 (Reuters) - The Hungarian forint slipped to a record low against the euro on Tuesday as the central bank's easy monetary policy stance, the loosest in central Europe, kept the currency under pressure. Most other central European currencies and stock markets dipped in early trade as investors shifted from optimism in U.S.-China trade talks to waiting for more concrete progress. The Romanian leu, though, stayed elevated after a post-election bounce that followed incumbent President Klaus Iohannis winning a run-off vote on Sunday.

The forint remained hardest hit by investors, dropping past an all-time low hit in September to trade as weak as 336.95 to the euro. By 0928 GMT, the forint was down 0.2% at 336.50. It has lost 4.6% so far this year. "The underlying basic reason is monetary policy in Hungary," one dealer said. The National Bank of Hungary maintained its ultra-loose policy last week, keeping the base rate at 0.9% and the overnight deposit rate at minus 0.05%. It is sticking to its accommodative stance, especially as economic growth is expected to slow in Hungary next year from close to 5% this year. The central bank declined to comment on the forint in an emailed reply to Reuters questions on Tuesday. It has repeatedly said it has no exchange rate target. "Why would the forint have strengthened? Nothing has changed, apart from the fact that sentiment in emerging markets has soured a little," another local dealer said. "So far this is a one way street for the forint (towards weakening)," the dealer added. Other central banks have also held interest rates steady even as major monetary institutions like the European Central Bank and U.S. Federal Reserve loosen policy. In the Czech case, rate setters are still debating a possible hike, although analysts widely expect rate stability ahead. The Czech crown and the Polish zloty dipped less than 0.1%, both sitting off multi-month highs hit this month. The leu was also relatively flat at 4.775 to the euro after touching its weakest since January last week. Markets expect the leu to stay on a weaker footing as a new minority government deals with plugging budget gaps. A draft bill on Tuesday showed the consolidated budget target for 2019 will be raised to 4.3% of gross domestic product from an initial estimate of 2.8%. The budget plan for 2020 will take the consolidated deficit as close to 3% of GDP as possible, Finance Minister Florin Citu said on Monday.

CEE SNAPSHO ATMARKETS T 1028

CET CURRENC IES

Latest Previou Daily Change

s

bid close change in 2019EURCZK Czech <EURCZK 25.5120 25.5065 -0.02% +0.76%= crown =>EURHUF Hungary <EURHUF 336.500 335.800 -0.21% -4.58%= forint => 0 0EURPLN Polish <EURPLN 4.3000 4.2984 -0.04% -0.24%= zloty =>EURRON Romanian <EURRON 4.7755 4.7750 -0.01% -2.54%= leu =>EURHRK Croatian <EURHRK 7.4330 7.4353 +0.03% -0.31%= kuna =>EURRSD Serbian <EURRSD 117.600 117.620 +0.02% +0.60%= dinar => 0 0Note: calculated from 1800daily CET

change

Latest Previou Daily Change

s

close change in 2019.PX Prague 1083.40 1084.56 -0.11% +9.82%

00

.BUX Budapest 43968.5 44314.4 -0.78% +12.349 5 %.WIG20 Warsaw <.WIG20 2189.71 2197.54 -0.36% -3.82%>.BETI Buchares 9747.73 9772.01 -0.25% +32.02t %.SBITO Ljubljan <.SBITO 897.17 898.76 -0.18% +11.55P a P> %.CRBEX Zagreb <.CRBEX 2003.64 1993.75 +0.50% +14.57> %.BELEX Belgrade <.BELEX 764.77 764.77 +0.00% +0.40%15 15>.SOFIX Sofia <.SOFIX 548.25 548.62 -0.07% -7.77%>

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year <CZ2YT= 1.4250 -0.0200 +206bp -2bpsRR RR> sCZ5YT= 5-year <CZ5YT= 1.2980 0.0920 +190bp +10bpsRR RR> sCZ10YT <CZ10YT 1.4920 0.0100 +185bp +2bps=RR 10-year =RR> s

Poland

PL2YT= 2-year <PL2YT= 1.3900 -0.0140 +202bp -1bpsRR RR> sPL5YT= 5-year <PL5YT= 1.7680 -0.0210 +237bp -1bpsRR RR> sPL10YT <PL10YT 2.0390 -0.0130 +240bp +0bps=RR 10-year =RR sFORWARD RATE AGREEME

NT

3x6 6x9 9x12 3M

interba nk

Czech <CZKFRA 2.24 2.24 2.15 2.18Rep ><PRIBO

R=>

Hungary <HUFFRA 0.23 0.25 0.29 0.18><BUBOR

=>

Poland <PLNFRA 1.73 1.71 1.66 1.71

<WIBOR =>

Note: are for askFRA prices

quotes

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(Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Luiza Ilie in Bucharest; Editing by Jan Harvey)