CEE MARKETS-Markets regain ground; forint firms as central bank tightens liquidity

Krisztina Than and Anita Komuves

liquidity@ BUDAPEST, Feb 4 (Reuters) - Central European currencies gained early on Tuesday, with the forint getting a boost from the National Bank of Hungary's liquidity swap tender on Monday where it rejected all bids. The bank has been offering FX swaps to commercial banks. The swaps, which allow the NBH to manage forint liquidity in the banking system, have been for years an important policy tool for the NBH, which has maintained its ultra-dovish stance. On Monday, the bank rejected all bids at the swap tender and said surplus liquidity in the banking system fell by 130 billion forints to 2.055 trillion. "This cutback of QE is a response to the steady depreciation of the forint as inflation has accelerated to above target over the past year and the central bank maintained an unchanged ultra-dovish stance," Commerzbank analyst Tatha Ghose said in a note. "It is encouraging that NBH has decided to finally act, but we view the central bank as lagging behind significantly." The forint, which has underperformed the region this year, falling 1.6%, gained 0.2% to 336.41 versus the euro on Tuesday, and traded stronger than the 338 it reached before the tender on Monday. Erste Bank analysts said the forint had room to strengthen further, as the central bank warned last week that liquidity could drop markedly in the banking system in the coming weeks. Unlike the Hungarian central bank, the Czech central bank has adopted a more hawkish tone recently, with discussion of rate increases back on the agenda. The bank holds its next rate meeting on Thursday. Markets expect rates to stay on hold then despite the bank's debate about possible tightening. Komercni Banka said while Thursday's central bank meeting was unlikely to lead to a rate change, its overall tone could be hawkish, helping to push up the crown. The currency gained 0.2% on Tuesday, in line with its peers in the region. Poland's central bank also meets this week and is expected to keep rates on hold, as the Polish economy, the region's largest, is slowing. Stock markets across the region rebounded, with Warsaw up 1% while Budapest traded 0.9% higher as investors' fears over the spreading of the new China virus subsided a bit. However, sentiment remained fragile.



Latest Previou Daily Change


bid close change in 2020EURCZK Czech <EURCZK 25.1370 25.1970 +0.24% +1.17%= crown =>EURHUF Hungary <EURHUF 336.410 337.200 +0.23% -1.57%= forint => 0 0EURPLN Polish <EURPLN 4.2865 4.3005 +0.33% -0.70%= zloty =>EURRON Romanian <EURRON 4.7775 4.7785 +0.02% +0.23%= leu =>EURHRK Croatian <EURHRK 7.4500 7.4453 -0.06% -0.06%= kuna =>EURRSD Serbian <EURRSD 117.540 117.610 +0.06% +0.03%= dinar => 0 0Note: calculated from 1800daily CET


Latest Previou Daily Change


close change in 2020.PX Prague 1087.79 1085.15 +0.24% -2.50%


.BUX Budapest 43785.9 43390.8 +0.91% -4.98%7 1.WIG20 Warsaw <.WIG20 2094.73 2072.88 +1.05% -2.57%>.BETI Buchares 9968.23 9958.13 +0.10% -0.09%


.SBITO Ljubljan <.SBITO 961.04 959.85 +0.12% +3.80%P a P>.CRBEX Zagreb <.CRBEX 2023.57 2026.57 -0.15% +0.30%>.BELEX Belgrade <.BELEX 813.76 813.98 -0.03% +1.51%15 15>.SOFIX Sofia <.SOFIX 572.98 573.96 -0.17% +0.85%>Yield Yield Spread Daily(bid) change vs Bund change


Czech spread


CZ2YT= 2-year <CZ2YT= 1.9510 0.1900 +262bp +18bpsRR RR> sCZ5YT= 5-year <CZ5YT= 1.6170 0.0200 +224bp +0bpsRR RR> sCZ10YT <CZ10YT 1.5420 0.0500 +196bp +3bps=RR 10-year =RR> s


PL2YT= 2-year <PL2YT= 1.4810 0.0080 +215bp +0bpsRR RR> sPL5YT= 5-year <PL5YT= 1.8380 0.0120 +246bp -1bpsRR RR> sPL10YT <PL10YT 2.1720 0.0140 +259bp -1bps=RR 10-year =RR> s


3x6 6x9 9x12 3M

interba nk

Czech <CZKFRA 2.18 2.17 2.15 2.16Rep ><PRIBO


Hungary <HUFFRA 0.34 0.42 0.50 0.24><BUBOR


Poland <PLNFRA 1.74 1.73 1.73 1.71><WIBOR


Note: are for askFRA prices


(Additional reporting by Jason Hovet in Prague; editing by Larry King)