CEE MARKETS-Assets mixed, forint resumes losses as central bank impact fades

Credit: REUTERS/BERNADETT SZABO

By Anita Komuves

BUDAPEST, April 3 (Reuters) - Central European stock markets and currencies were mixed on Friday as investors tried to digest huge swings in oil prices and more than six million new U.S. jobless claims, signalling further grave economic damage from the coronavirus epidemic.

The Hungarian forint EURHUF= was down 0.85% on the day at 366.05 to the euro, giving up some of its gains from previous days, as the impact from the central bank's unexpected tightening on Wednesday was fading. The forint has lost more than 9.5% of its value versus the euro this year, underperforming its peers in the region.

"There is still pressure on the forint, but this is true for other regional currencies as well," Erste Bank said in a note.

"The NHB's quasi-rate-hike and the government's fiscal stimulus plan expected next week could help stabilize the forint in the near future."

A few details of that plan were made public on Friday when Prime Minister Viktor Orban announced that Hungary would introduce a new pandemic fund on Saturday and the country's biggest economic stimulus package would be worked out by Tuesday.

The Hungarian currency has been on a rollercoaster this week. It plunged to fresh record lows near 370 to the euro on Wednesday on a mix of factors, including a controversial government move to secure open-ended emergency powers to fight the coronavirus. Dismal PMI data also contributed to the slide.

The forint's freefall was stopped by the central bank which announced on Wednesday a new one-week deposit tender available to banks at its 0.9% base rate, which analysts called an implicit rate hike.

The forint rallied about 2% after the announcement and short-term interbank market rates jumped about 40 basis points. On Friday, short-term rates climbed to above 0.9% on all maturities. BUBOR=

The bank held the first one-week depo tender on Thursday and accepted all the 655 billion forints ($1.96 billion) worth of bids submitted.

Elsewhere, the Czech crown EURCZK= was up 0.15% at 27.540 to the euro while the Polish zloty EURPLN= eased 0.25% and was trading at 4.580 versus the common currency. The Romanian leu EURRON= was stable.

Regional stock indexes were mixed: Prague .PX was down by 0.5% and Budapest .BUX had slipped 0.8% by 0818GMT. Warsaw's .WIG20 and Bucharest's .BETI indexes firmed about 0.5%.

Central banks in the region have been taking emergency steps to fight the economic effects of the coronavirus epidemic. Czech, Polish and Romanian banks have announced rate cuts. Romania's central bank also said on March 20 that it would buy leu-denominated debt on the secondary market to consolidate structural liquidity in the banking system.

"According to unconfirmed sources, BNR conducted a test balloon in terms of secondary market government bond purchases. Guesstimates set the purchased amounts at 150 million lei," Raiffeisen said in a note.

"The small amounts suggest that this was more or less a 'first contact' between investors and the central bank with both parties entering uncharted waters. However, yields fell somewhat after the first market intervention," it added.

CEE MARKETS

SNAPSHOT

AT 1018 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

Czech crown

EURCZK=

27.5400

27.5800

+0.15%

-7.65%

Hungary forint

EURHUF=

366.0000

362.9000

-0.85%

-9.52%

Polish zloty

EURPLN=

4.5800

4.5684

-0.25%

-7.07%

Romanian leu

EURRON=

4.8305

4.8345

+0.08%

-0.87%

Croatian kuna

EURHRK=

7.6290

7.6304

+0.02%

-2.41%

Serbian dinar

EURRSD=

117.4200

117.4700

+0.04%

+0.13%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2020

Prague

.PX

777.10

780.8500

-0.48%

-30.34%

Budapest

.BUX

32338.41

32591.95

-0.78%

-29.83%

Warsaw

.WIG20

1497.76

1491.55

+0.42%

-30.34%

Bucharest

.BETI

7589.43

7548.64

+0.54%

-23.93%

Ljubljana

.SBITOP

713.96

714.55

-0.08%

-22.89%

Zagreb

.CRBEX

1502.24

1491.40

+0.73%

-25.54%

Belgrade

.BELEX15

645.09

645.03

+0.01%

-19.53%

Sofia

.SOFIX

421.04

421.69

-0.15%

-25.89%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

1.0300

0.1200

+168bps

+13bps

5-year

CZ5YT=RR

1.2190

0.0410

+182bps

+4bps

10-year

CZ10YT=RR

1.5030

0.0680

+195bps

+8bps

Poland

2-year

PL2YT=RR

1.0350

-0.1430

+168bps

-14bps

5-year

PL5YT=RR

1.3960

-0.0020

+200bps

+0bps

10-year

PL10YT=RR

1.7490

-0.0300

+219bps

-2bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.35

0.37

0.43

1.02

Hungary

HUFFRABUBOR=

1.00

0.93

1.04

0.85

Poland

PLNFRAWIBOR=

0.58

0.49

0.48

1.17

Note: FRA quotes

are for ask prices

**************************************************************

(Additional reporting by Luiza Ilie in Bucharest; editing by Nick Macfie)

((komuves.anita@thomsonreuters.com (+36 70 795 8815))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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