Wires

CEE MARKETS-Romanian markets shrug off political turmoil, Czech central bank eyed

Anita Komuves

eyed@ BUDAPEST, Feb 6 (Reuters) - The leu was stable and Romanian stocks rose on Thursday after the liberal minority government fell in a no-confidence vote, which markets took as the first step towards snap elections that could restore stability after years of political turmoil. "The initial reaction in the leu to the vote of no confidence was positive," said Commerzbank analyst Alexandra Bechtel in a note. "Clearly for the FX market a bit of a bumpy end is preferable to the continued uncertainty of a political vacuum." Ousting the cabinet will likely usher in weeks of political wrangling and stalled policymaking in Romania at a time when widening budget and current account deficits are pressuring assets and rating outlooks. The vote, however, could open the way for an early election. "The sooner the country has a new government, the better it will be for the economy, especially when considering the serious fiscal adjustments needed this year," ING said in a note. Bucharest's bluechip index was up 0.9% on the day, at a near two-week high. The Czech central bank holds its next rate meeting later on Thursday. The bank has adopted a more hawkish tone recently, with discussions of rate increases back on the agenda. However, none of the respondents in the latest Reuters poll see a rate hike this year. On the contrary, some expect a cut, though they have pushed their expectations towards a later date. "The rate hike cannot be ruled out completely, but the market consensus and pricing, as well as our house's call, is for no change today," Komercni Banka's fixed income trader Frantisek Kavka said in a note. Elsewhere in the region, the Polish central bank left its benchmark interest rate unchanged at 1.5% on Wednesday. On Thursday, the zloty traded 0.2% lower against the euro. The Hungarian forint eased 0.1% to 337.4 versus the euro, reversing its gains posted earlier this week. The Czech crown was stable at 25.0850 versus the euro ahead of the central bank meeting. Some stock markets in the region extended gains, with Budapest up 0.7% and Prague rising 0.3%. Warsaw's main index, however, traded flat. Fresh industrial output data from the Czech Republic and Hungary showed an annual decline in output in December, signaling that the region's fast-growing economies have likely started losing steam this year as the euro zone slows. Industrial production in the Czech Republic dropped 3.4% in annual terms in December, while Hungarian output fell 1.2% year-on-year, in unadjusted terms.

CEE SNAPSHO ATMARKETS T 0952

CET CURRENC IES

Latest Previou Daily Change

s

bid close change in 2020EURCZK Czech <EURCZK 25.0850 25.0880 +0.01% +1.38%= crown =>EURHUF Hungary <EURHUF 337.400 337.090 -0.09% -1.85%= forint => 0 0EURPLN Polish <EURPLN 4.2547 4.2474 -0.17% +0.04%= zloty =>EURRON Romanian <EURRON 4.7670 4.7665 -0.01% +0.45%= leu =>EURHRK Croatian <EURHRK 7.4540 7.4560 +0.03% -0.12%= kuna =>EURRSD Serbian <EURRSD 117.530 117.610 +0.07% +0.03%= dinar => 0 0Note: calculated from 1800daily CET

change

Latest Previou Daily Change

s

close change in 2020.PX Prague 1106.98 1103.37 +0.33% -0.78%

00

.BUX Budapest 44346.6 44020.0 +0.74% -3.77%3 3.WIG20 Warsaw <.WIG20 2122.38 2122.91 -0.02% -1.29%>.BETI Buchares 10050.9 10035.7 +0.15% +0.74%t 0 3.SBITO Ljubljan <.SBITO 973.41 970.87 +0.26% +5.14%P a P>.CRBEX Zagreb <.CRBEX 2023.06 2017.11 +0.29% +0.28%>.BELEX Belgrade <.BELEX 813.91 816.09 -0.27% +1.52%15 15>.SOFIX Sofia <.SOFIX 568.98 570.36 -0.24% +0.15%>Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year <CZ2YT= 1.8110 0.0320 +244bp +2bpsRR RR> sCZ5YT= 5-year <CZ5YT= 1.5990 -0.0420 +217bp -6bpsRR RR> sCZ10YT <CZ10YT 1.5390 0.0200 +188bp -1bps=RR 10-year =RR> s

Poland

PL2YT= 2-year <PL2YT= 1.5780 0.0060 +221bp +0bpsRR RR> sPL5YT= 5-year <PL5YT= 1.8460 0.0060 +242bp -2bpsRR RR> sPL10YT <PL10YT 2.2040 0.0000 +255bp -3bps=RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M

interba nk

Czech <CZKFRA 2.20 2.19 2.18 2.16Rep ><PRIBO

R=>

Hungary <HUFFRA 0.42 0.52 0.62 0.29><BUBOR

=>

Poland <PLNFRA 1.73 1.74 1.73 1.71><WIBOR

=>

Note: are for askFRA prices

quotes

(Additional reporting by Luiza Ilie in Bucharest, Robert Muller in Prague; Editing by Amy Caren Daniel)