CEE MARKETS-Ailing zloty extends losses, crown clings to 14-year highs

By Pawel Florkiewicz and Jason Hovet Feb 22 (Reuters) - The Polish zloty fell 0.4% in Wednesday morning trade, heading back towards four-month lows hit last week, with central Europe's most liquid currency pressured by weak economic data, high inflation and a funding stand-off with the European Union. At 0859 GMT, the zloty traded at 4.765 versus the euro, off a four-month low of near 4.8 hit last week but still down 1.6% for the year, underperforming its regional peers, which were mildy stronger, clawing back some of last year's sharp falls. Weaker-than-forecast Polish retail sales figures already put pressure on the zloty on Tuesday, as they highlighted the weakness of the region's main economy in the 2023 election year, with Poland likely mired in stagflation. Poland's efforts to access billions of euros of EU recovery money suffered another setback after President Andrzej Duda referred a key judicial reform bill to a constitutional tribunal for review earlier this month. "The zloty lacks impulses to strengthen and today's session, due to the not very extensive calendar of macroeconomic data releases, should not provide incentives for significant changes on the FX market," economists at Bank Millennium said in a note. "The source of possible volatility may be the publication of the report from the last Fed meeting, which will be analysed in terms of the outlook for monetary policy in the U.S." Analysts at Hungarian brokerage Erste Investment said markets expected U.S. rates to reach 5.35% this year, above previous forecasts due to the resilience of the economy. The strength of the dollar is generally negative for central Europe's high-yield currencies. The Czech crown , which has gained nearly 2% versus the euro this year and is trading near 14-year-highs, bolstered by the Czech National Bank's pledge to intervene to prevent currency weakness, inched 0.07% higher. Markets were also tuned to midday government bond tenders. The Czechs will offer 5-, 9- and 12-year bonds at a regular auction, having drawn strong demand at previous sales already this year. Demand should stay up on Wednesday as well. "While the rates soared over the past couple of sessions, the bonds have been less than enthusiastic to re-price lower, creating an ASW headwind for potential buyers," Komercni Banka trader Marek Lesko said in a client note. "Overall, there's very little to suggest the auction is going to be weak." Hungary's forint dropped 0.2% in morning trade but was still hovering near nine-month highs hit this month, bolstered by the European Union's highest central bank interest rates amid a surge in inflation to more than 20%. CEE SNAPSHO AT

MARKETS T 0959

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.7140 23.7300 +0.07% +1.87% = crown =>
EURHUF Hungary <EURHUF 383.800 383.100 -0.18% +4.08% = forint => 0 0
EURPLN Polish <EURPLN 4.7650 4.7460 -0.40% -1.58% = zloty =>
EURRON Romanian <EURRON 4.9265 4.9190 -0.15% +0.32% = leu =>
EURHRK Croatian <EURHRK 7.5330 7.5365 +0.05% +0.05% = kuna =>
EURRSD Serbian <EURRSD 117.250 117.325 +0.06% +0.04% = dinar => 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change s

close change in 2023 .PX Prague 1383.42 1388.72 -0.38% +15.12 00 % .BUX Budapest 45151.3 45092.8 +0.13% +3.10% 8 9
.WIG20 Warsaw <.WIG20 1798.11 1825.89 -1.52% +0.34% >
.BETI Buchares 12285.5 12346.6 -0.49% +5.33% t 5 2
.SBITO Ljubljan <.SBITO 1191.12 1192.58 -0.12% +13.57 P a P> % .CRBEX Zagreb <.CRBEX 2164.38 2171.26 -0.32% +723.6 > 8% .BELEX Belgrade <.BELEX 872.73 877.61 -0.56% +5.84% 15 15>
.SOFIX Sofia <.SOFIX 614.04 614.14 -0.02% +2.09% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 5.7590 -0.2450 +280bp -25bps RR RR> s
CZ5YT= 5-year <CZ5YT= 5.1840 -0.0380 +257bp -5bps RR RR> s
CZ10YT <CZ10YT 4.8860 0.0500 +234bp +4bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 6.4930 -0.0890 +354bp -10bps RR RR> s
PL5YT= 5-year <PL5YT= 6.6790 0.0050 +407bp +0bps RR RR> s
PL10YT <PL10YT 6.7060 0.0060 +416bp +0bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.21 7.03 6.54 7.20 Rep ><PRIBO

R=>

Hungary <HUFFRA 15.71 14.41 13.01 16.27 ><BUBOR

=>

Poland <PLNFRA 6.98 7.05 6.80 6.94 ><WIBOR

=>

Note: are for ask

FRA prices

quotes

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(Reporting by Pawel Florkiewicz in Warsaw and Jason Hovet in Prague; Writing by Gergely Szakacs; Editing by Rashmi Aich)

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