Off The Wire
CEE MARKETS-Strong auction helps Hungarian assets buck regional currency fall
* Hungarian bond auction draws strong demand, forint firms
* Budapest stocks hit record high
(Recasts, with currencies fall, Hungarian bond auction, new comments)
By Sandor Peto and Marcin Goclowski
BUDAPEST/WARSAW, Oct 12 (Reuters) - Central European currencies mostly eased on Thursday as the dollar rebounded in global markets, but gains in some government bonds and stocks and a robust Hungarian bond auction suggested demand for emerging market assets remains solid.
The zloty and the leu eased 0.2 percent against the euro by 1313 GMT.
Polish data confirmed a rise in annual inflation to 2.2 percent in September, although that failed to prevent a retreat in the zloty. Figures two weeks ago had led to forward rate agreements pricing in a Polish interest rate hike within 12 months, but most analysts expect a later rise.
Polish and Hungarian government bond yields still mostly fell by a few basis points.
Hungary sold bonds worth 63.6 billion forints at two auctions, 23.6 billion forints more than the planned amount and for lower costs than those suggested by secondary market yields.
Yields rose mildly after the auction, "but the positive sentiment persists," one Budapest-based trader said.
Budapest's stock index gained half a percent to reach record highs, while the forint bucked the regional trend of weakening.
It traded on the firmer side of 310 against the euro, off the five-month highs it reached at 312.58 after the central bank cut its overnight deposit rate and announced liquidity-boosting measures last month.
"The central bank has failed to keep it weaker than 310, and there are expectations that it will do something again, like cutting the overnight rate further," the trader said.
The leu , meanwhile, touched a two-week low against the euro, and Romanian government bond yields rose by 2-3 basis points. The leu has been the region's worst-performing unit against the euro this year and has shed more than 1 percent.
Last week a liquidity squeeze which also lifted interbank leu interest rates helped the currency.
But this week it has been retreating from a two-month high due to worries over a government reshuffle and a bigger than expected rise in Romanian inflation in September.
Prime Minister Mihai Tudose said corruption allegations over three ministers may pave the way for a proposed cabinet reshuffle, which could create tension with the head of the ruling Social Democrat party.
The party's executive meets after markets close on Thursday to decide whether to endorse the reshuffle proposal.
CEE MARKETS SNAPSH AT 1513 CET
Latest Previo Daily Change
bid close change in
2017 Czech crown 25.890 25.879 -0.04% 4.31%
0 5 Hungary 308.95 309.33 +0.12 -0.04% forint 00 50 % Polish zloty 4.2741 4.2666 -0.18% 3.04% Romanian leu 4.5925 4.5852 -0.16% -1.25% Croatian 7.5077 7.5105 +0.04 0.63% kuna % Serbian 119.31 119.46 +0.13 3.39% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET
Latest Previo Daily Change
close change in
2017 Prague 1055.6 1054.3 +0.12 +14.5
4 7 % 4% Budapest 38688. 38453. +0.61 +20.8
60 12 % 9% Warsaw 2537.1 2551.7 -0.57% +30.2
6 8 5% Bucharest 8001.6 8004.8 -0.04% +12.9
0 4 4% Ljubljana 813.57 814.90 -0.16% +13.3
8% Zagreb 1866.4 1849.3 +0.92 -6.44%
2 8 % Belgrade 727.79 726.96 +0.11 +1.45
% % Sofia 668.34 672.80 -0.66% +13.9
Yield Yield Spread Daily
(bid) change vs change
Bund in Czech spread Republic 2-year 0.057 0 +075b +0bps
ps 5-year 0.486 0.004 +076b +2bps
ps 10-year 1.357 -0.007 +091b +1bps
ps Poland 2-year 1.728 0.004 +242b +1bps
ps 5-year 2.703 -0.017 +298b +0bps
ps 10-year 3.381 -0.034 +293b -2bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
ank Czech Rep <PR 0.75 0.89 1 0
IBOR=> Hungary <BU 0.07 0.1 0.15 0.03
BOR=> Poland <WI 1.764 1.808 1.876 1.73
BOR=> Note: FRA are for ask quotes prices ********************************************************* ***** (Additional reporting by Luiza Ilie in Bucharest; Editing by Angus MacSwan and Hugh Lawson)