Off The Wire
CEE MARKETS-Currencies rebound, shrug off Polish data, Budapest stocks hit record high
* Czech central banker reiterates gradual rate hikes are possible
* Hungarian mortgage scheme less painful to banks than expected
* OTP, FHB banks rise boosts Budapest stock index to record high
(Adds Polish economic data)
By Sandor Peto and Jason Hovet
BUDAPEST/PRAGUE, May 19 (Reuters) - Central European currencies and stocks rebounded on Friday, with Budapest's stock index hitting a record high as risk appetite returned in global markets and a batch of domestic news improved the outlook of financial sector stocks in the region.
A Czech central banker reiterated the possibility of gradual rate hikes and a deal in Hungary about a certified mortgage lending scheme put less stress on banks' spreads than expected, boosting the shares of OTP and FHB . The crown , the forint and the leu firmed 0.2 percent against the euro by 1340 GMT, with the Czech unit trading at 26.532.
Czech central bank (CNB) board member Marek Mora said in an interview in the Hospodarske Noviny daily that the bank should raise interest rates slowly and gradually, but if the exchange rate does not rise, it may lead to a faster path. The CNB is the first central bank in the region to flag that a reversal of years of interest rate cuts may be near.
Early last month, the bank opened the way for a firming of the crown, which can push inflation lower, removing a cap which had kept the currency weaker than 27 since 2013.
The currency has firmed less than investors, who have bought tens of billions of euros worth of crowns, had expected.
"If the koruna (crown) does not significantly strengthen to less than EUR/CZK 26 we may see the CNB decide - for the first time in almost 10 years - to hike its 2W (two-week) repo rate this year," Komercni analysts said in a note.
The region's main currencies and stock indices are near multi-week or even multi-year highs despite a fall this week due to the worries over U.S. President Donald Trump's future.
Investors also watch Brazil's corruption crisis and economic woes.
Figures released in the region this month have confirmed that its economies are growing at robust rates, partly fuelled by surging wages, without signs of a surge in inflation or budget deficits, at least for now.
Polish data for April, released on Friday, showed slower than expected growth in retail sales, industrial output and wages. The zloty , however, shrugged off the figures and firmed about half a percent and briefly pierced the 4.2 psychological line against the euro, extending a technical rebound from levels near the 4.23 support line.
"I suppose that markets bet that economic upturn would sustain, which would make MPC (central bank) finally change its dovish stance," said Piotr Poplawski, senior economist at ING BSK in Warsaw.
CEE MARKETS SNAPSH AT 1540 CET
Latest Previo Daily Change
bid close change in
2017 Czech crown 26.532 26.572 +0.15 1.79%
0 0 % Hungary 309.10 309.85 +0.24 -0.09% forint 00 50 % Polish zloty 4.2021 4.2206 +0.44 4.80%
% Romanian leu 4.5625 4.5696 +0.16 -0.60%
% Croatian kuna 7.4440 7.4535 +0.13 1.49%
% Serbian dinar 122.93 123.00 +0.06 0.34%
00 00 % Note: daily calculated previo close 1800 change from us at CET
Latest Previo Daily Change
close change in
2017 Prague 1018.7 1011.7 +0.70 +10.5
9 1 % 4% Budapest 34798. 34528. +0.78 +8.73
32 85 % % Warsaw 2315.4 2295.1 +0.89 +18.8
9 4 % 7% Bucharest 8492.3 8430.3 +0.74 +19.8
0 3 % 6% Ljubljana 784.68 777.16 +0.97 +9.35
% % Zagreb 1865.5 1867.1 -0.08% -6.48%
2 0 Belgrade 738.95 731.38 +1.04 +3.01
% % Sofia 658.99 659.51 -0.08% +12.3
Yield Yield Spread Daily
(bid) change vs change
Bund in Czech spread Republic 2-year -0.084 0.051 +059b +2bps
ps 5-year 0.037 0.05 +039b +4bps
ps 10-year 0.877 0.03 +051b +1bps
ps Poland 2-year 1.946 0.009 +262b -2bps
ps 5-year 2.773 0.007 +312b -1bps
ps 10-year 3.339 -0.002 +297b -2bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
ank Czech Rep <PR 0.37 0.45 0.55 0
IBOR=> Hungary <BU 0.19 0.24 0.33 0.15
BOR=> Poland <WI 1.749 1.769 1.809 1.73
BOR=> Note: FRA are for ask quotes prices ********************************************************** ****
(Additional reporting by Aleksandar Vasovic in Belgrade/Radu Marinas in Bucharest/Bartosz Chmielewski in Warsaw; Editing by Toby Davis)