US Markets

CEE MARKETS-Currencies steady ahead of expected Fed rate cut

Credit: REUTERS/DAVID W CERNY

Central European currencies held steady versus the euro on Wednesday ahead of an expected U.S. Federal Reserve rate cut, while in Bucharest oil and gas group OMV Petrom shares hit a one-week low after posting lower net profit.

By 0940 GMT Bucharest's blue chip index .BETI was down 0.3%. Warsaw's main index .WIG20 fell 0.2%, while Budapest .BUX and Prague .PX shares were up 0.4% and 0.3%, respectively.

Currencies were flat against the euro as investors braced for an interest rate cut by the Federal Reserve and clues on its policy outlook.

Monetary policy loosening by the world's largest central banks has so far eased pressure to act on policymakers in central Europe, where consumption-driven economic growth has mostly held up in the face of a euro zone slowdown and concerns over Britain's now further delayed exit from the European Union.

"In general, the dovish global central bank backdrop increases the degrees of freedom for CEE central banks to keep rates low for longer," Raiffeisen Bank said in a research note.

Policymakers in the region have kept rates on hold, but in the Czech Republic some board members have spoken in favour of hikes.

Analysts said the crown EURCZK= will be without any strong direction until next week's central bank meeting where policymakers are likely to debate potential rate hikes. In September the board voted 5-2 for stable rates, with two votes for a hike.

In Romania, the leu was unfazed by the rejection on Tuesday of finance ministry nominee Florin Citu by parliament's joint budget and finance committees, whose decision is not binding.

Citu's centrist National Liberal Party aims to win a parliamentary vote of confidence on Nov. 4, to replace the outgoing Social Democrat government, ousted in a parliamentary vote of no-confidence earlier this month.

The finance ministry is expected to release domestic debt issuance plans for November, as well as budget data for September. The widening of the country's budget and current account deficits have weighed on assets.

"We expect intensifying pressure in terms of sovereign financing costs in the short-run due to the weakening stance of the public finance," BT Capital Partners said in a research note.

CEE MARKETS

SNAPSHOT

AT 1100 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

Czech crown

EURCZK=

25.5280

25.5470

+0.07%

+0.70%

Hungary forint

EURHUF=

329.8000

329.9000

+0.03%

-2.64%

Polish zloty

EURPLN=

4.2660

4.2635

-0.06%

+0.55%

Romanian leu

EURRON=

4.7570

4.7560

-0.02%

-2.17%

Croatian kuna

EURHRK=

7.4670

7.4555

-0.15%

-0.76%

Serbian dinar

EURRSD=

117.5400

117.4200

-0.10%

+0.65%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

Prague

.PX

1064.55

1062.1800

+0.22%

+7.91%

Budapest

.BUX

42561.14

42453.16

+0.25%

+8.74%

Warsaw

.WIG20

2225.18

2227.93

-0.12%

-2.26%

Bucharest

.BETI

9687.70

9713.66

-0.27%

+31.20%

Ljubljana

.SBITOP

858.18

854.19

+0.47%

+6.70%

Zagreb

.CRBEX

2010.81

2017.10

-0.31%

+14.98%

Belgrade

.BELEX15

749.93

749.57

+0.05%

-1.54%

Sofia

.SOFIX

555.98

556.28

-0.05%

-6.47%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

1.3060

0.0680

+194bps

+6bps

5-year

CZ5YT=RR

1.1200

-0.0170

+172bps

-2bps

10-year

CZ10YT=RR

1.3800

-0.0040

+174bps

-1bps

Poland

2-year

PL2YT=RR

1.4510

-0.0200

+209bps

-2bps

5-year

PL5YT=RR

1.7530

0.0070

+236bps

+1bps

10-year

PL10YT=RR

2.0170

0.0090

+237bps

+1bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

2.24

2.22

2.15

2.18

Hungary

HUFFRABUBOR=

0.27

0.33

0.37

0.20

Poland

PLNFRAWIBOR=

1.74

1.71

1.68

1.71

Note: FRA quotes

are for ask prices

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

(Reporting by Luiza Ilie in Bucharest, Alan Charlish in Warsaw and Jason Hovet in Prague; Editing by Emelia Sithole-Matarise)

((luiza.ilie@thomsonreuters.com; +4021 527 0312; Reuters Messaging: luiza.ilie.thomsonreuters.com@reuters.net))

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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