UPDATE 1-CEE MARKETS-Stocks, currencies plunge as Central Europe shuts doors to fight virus

Anita Komuves

to fight virus@

* Investors eye measures from central banks

* Hungarian forint weakens to fresh all-time low vs euro

* Czech crown plunges more than 2%, Prague stocks at 11-year low

(Adds forint at record lows, details on PM Orban, Hungary central bank) BUDAPEST, March 16 (Reuters) - The Hungarian forint hit a record low versus the euro, and the Czech crown plunged more than 2% on Monday, as markets were pricing in potential central bank measures in Central Europe to ease the economic impact from the coronavirus pandemic. The Czech crown fell 2.25% and was trading at 26.875 to the euro. This is nearing the level that the Czech central bank maintained in a weak crown regime between 2013-2017. Prague stocks fell 7.61% to their lowest levels since April 2009. As of 1221 GMT, the Hungarian forint fell almost 1% from the open to 342 to the euro, a fresh low. The forint plunged to its new lows shortly after Prime Minister Viktor Orban told the Parliament that Hungary would need monetary and fiscal tools to tackle the expected grave economic impact from the spread of the coronavirus. Orban also announced that Hungary will close its borders for international passengers, close cultural and sports events and establishments and limit the opening hours of restaurants.

Hungarian central bank Governor Gyorgy Matolcsy said the country must accelerate publicly funded investment projects already approved, launch a fresh home-building programme and focus on investments, consumption and lending to keep the economy going. The central bank offered 308 million euros ($344.34 million) worth of fx swaps as forint liquidity to commercial banks at its weekly tender, more than a week ago, it said on its NBHP page. Equities in Budapest were down 9.5% by midday. The Polish central bank was conducting repo operations on Monday as an extraordinary measure to improve liquidity in the bond market, dealers and analysts said. Some analysts are also expecting a rate cut as early as Tuesday. The Monetary Policy Council will hold a regular monthly meeting on Tuesday. The Polish central bank does not take generally rate setting decisions at regular sittings but the extraordinary situation may require extraordinary steps, analysts said. Central banks around the world have cut rates and announced stimulus measures in recent days in order to try to ease the economic fallout from the spread of the coronavirus. The Fed slashed interest rates to near zero, pledged hundreds of billions of dollars in asset purchases and backstopped foreign authorities with the offer of cheap dollar financing. nL1N2B80FD "FX markets in the region had priced in this Fed cut before, that is why there are no dramatic moves in regional currencies now," a dealer in Budapest said. Governments across the CEE region introduced more and more restrictions over the weekend to stop the spread of the virus. Poland stopped international flights, Slovakia closed its borders to foreigners and the government of Hungary shut down schools starting from Monday. The Czech government on Friday imposed a ban on foreigners entering the country and Czechs traveling abroad as of Monday. The crown has been the hardest hit local currency in recent weeks as it had been a popular currency for foreign investors to hold over the last couple of years, and because of growing expectations of rate cuts in coming weeks. Markets are pricing in about five rate cuts over the next year. CSOB bank said there was a chance the Czech central bank could cut rates by up to 100 basis points at its March 26 meeting. The bank's analysts said uncertainty will continue to impact markets. "Markets will only be interested in one thing, how quickly quarantine measures take effect and the daily rise of new cases start to drop," CSOB said. Czech central bank board member Oldrich Dedek told Reuters on Friday he was inclined to back an interest rate cut but still needed to consider by how much. He is the second member of the seven-person board to back a cut.



Latest Previous Daily Changebid close change in 2020Czech 26.8750 26.2700 -2.25% -5.37%


Hungary 341.5000 340.2900 -0.35% -3.03%


Polish 4.4000 4.3751 -0.57% -3.26%


Romanian 4.8280 4.8260 -0.04% -0.82%


Croatian 7.6170 7.5701 -0.62% -2.25%


Serbian 117.5900 117.7300 +0.12% -0.02%


Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2020Prague 762.37 825.1500 -7.61% -31.66%Budapest 30935.05 34189.09 -9.52% -32.87%Warsaw 1263.96 1365.97 -7.47% -41.21%Bucharest 7159.79 7882.19 -9.16% -28.24%Ljubljana 733.14 762.12 -3.80% -20.82%Zagreb 1437.53 1512.15 -4.93% -28.74%Belgrade <.BELEX15 703.50 714.24 -1.50% -12.25%>Sofia 421.76 447.95 -5.85% -25.76%Yield Yield Spread Daily(bid) change vs Bund change


Czech spread


2-year <CZ2YT=RR 1.6630 0.0350 +255bps +1bps>5-year <CZ5YT=RR 1.5720 0.0570 +232bps +2bps>10-year <CZ10YT=R 1.1040 0.0000 +164bps -5bps

R> Poland

2-year <PL2YT=RR 1.2600 -0.1690 +215bps -20bps>5-year <PL5YT=RR 1.7380 -0.0590 +248bps -10bps>10-year <PL10YT=R 1.8330 0.0000 +237bps -5bps


3x6 6x9 9x12 3M

interban k

Czech Rep < 1.83 1.39 0.87 2.31


Hungary 0.68 0.75 0.83 0.67


Poland < 1.11 0.95 0.86 1.69

WIBOR=> Note: FRA are for ask prices quotes



($1 = 0.8945 euros)

(Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Kirsten Donovan and Sherry Jacob-Phillips)