CEE MARKETS-Zloty hit by Swiss franc mortgage ruling

Credit: REUTERS/Peter Andrews

The Polish zloty continued to weaken on Friday after a Polish Supreme Court verdict that investors fear raises the risk that Swiss franc mortgage loans will be converted into the local currency on terms unfavourable to banks.

WARSAW, Nov 29 (Reuters) - The Polish zloty EURPLN= continued to weaken on Friday after a Polish Supreme Court verdict that investors fear raises the risk that Swiss franc mortgage loans will be converted into the local currency on terms unfavourable to banks.

Other regional currencies gained, with Hungary's forint and Romania's leu rebounding after hitting new record lows against the euro this week.

The Czech crown pushed higher after a slight upward revision in third-quarter growth data indicated the region was still holding up despite a slowdown in western markets.

Poland's Supreme Court ruled on Thursday in a case brought by a bank against one of thousands of Poles who took out Swiss franc-denominated mortgages that have become prohibitively expensive to service after the franc soared in value.

Overturning an Appeals Court verdict after an Oct. 3 ruling by the European Union's top court, it said it could be possible to convert the loan into zloty while keeping the original interest rate, an outcome seen as unfavourable for lenders.

The zloty was down 0.1% on the day at 4.326 per euro at 1046 GMT, after having touched 4.3247 on Thursday after the verdict.

"The Supreme Court's judgment reminded investors of the problem of foreign exchange mortgages at a rather unfortunate time -- after breaking 4.30," ING analysts said in a note.

"With low pre-Christmas volatility, this raises the risk of the pair reaching another resistance at 4.35 even next week."

The Hungarian forint EURHUF= rebounded after hitting a record low against the euro on Thursday, gaining 0.6% to 333.90 per euro.

Thin trading on the long Thanksgiving weekend meant lower volumes were having an outsized effect, a Budapest-based dealer said, adding: "People are out buying LED TV's, they don't buy FX right now."

The Czech crown EURCZK= firmed 0.1% to 25.542 to the euro while the Romanian leu EURRON= strengthened 0.3% to 4.7785.

Czech economic growth slowed somewhat in the third quarter, revised data showed on Friday, although analysts said it was still holding up well despite the slowdown in external markets like Germany.

Analysts expected the data would keep the central bank in wait-and-see mode, even as it is among the few European monetary bodies still debating whether a rate hike is still needed to get ahead of domestic inflationary pressures.

Governor Jiri Rusnok said in an interview with news website Aktualne.cz published on Friday that there was high likelihood of rate stability ahead.

"Today's data are an argument against raising interest rates," Komercni Banka senior economist Michale Brozka said.

The region's growth leaders Hungary and Poland published third-quarter gross domestic product data that was matched first estimates.

"As the data is in line with the Polish Monetary Policy Council's (MPC) expectations and inflation remains in the NBP's target range, they will not affect the MPC's interest rate decisions in the coming months," Bank Pocztowy Chief Economist Monika Kurtek said in a note.

Stock markets were down, hit by fears that Chinese retaliation against a U.S. law backing Hong Kong protesters could threaten to derail negotiations on a trade truce between the two countries.

Prague's PX .PX index was down 0.30% while Budapest's main index .BUX fell 0.29%.

CEE MARKETS

SNAPSHOT

AT 1146 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

EURCZK=

Czech crown

EURCZK=

25.5420

25.5715

+0.12%

+0.65%

EURHUF=

Hungary forint

EURHUF=

333.9000

336.0250

+0.64%

-3.84%

EURPLN=

Polish zloty

EURPLN=

4.3260

4.3216

-0.10%

-0.84%

EURRON=

Romanian leu

EURRON=

4.7785

4.7925

+0.29%

-2.61%

EURHRK=

Croatian kuna

EURHRK=

7.4355

7.4373

+0.02%

-0.34%

EURRSD=

Serbian dinar

EURRSD=

117.5000

117.6100

+0.09%

+0.68%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

.PX

Prague

.PX

1081.16

1083.8200

-0.25%

+9.59%

.BUX

Budapest

.BUX

43652.14

43799.85

-0.34%

+11.53%

.WIG20

Warsaw

.WIG20

2168.09

2169.09

-0.05%

-4.77%

.BETI

Bucharest

.BETI

9871.16

9869.45

+0.02%

+33.69%

.SBITOP

Ljubljana

.SBITOP

894.16

895.10

-0.11%

+11.18%

.CRBEX

Zagreb

.CRBEX

1993.02

1994.64

-0.08%

+13.96%

.BELEX15

Belgrade

.BELEX15

774.15

771.55

+0.34%

+1.64%

.SOFIX

Sofia

.SOFIX

543.76

543.36

+0.07%

-8.53%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

1.4450

0.0510

+208bps

+5bps

CZ5YT=RR

5-year

CZ5YT=RR

1.2920

0.0680

+190bps

+7bps

CZ10YT=RR

10-year

CZ10YT=RR

1.4590

-0.0180

+183bps

-2bps

Poland

PL2YT=RR

2-year

PL2YT=RR

1.3730

-0.0220

+201bps

-3bps

PL5YT=RR

5-year

PL5YT=RR

1.7220

-0.0230

+233bps

-2bps

PL10YT=RR

10-year

PL10YT=RR

1.9680

-0.0260

+234bps

-2bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

2.23

2.23

2.16

2.18

Hungary

HUFFRABUBOR=

0.24

0.25

0.28

0.17

Poland

PLNFRAWIBOR=

1.72

1.68

1.64

1.71

Note: FRA quotes

are for ask prices

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

Central Europe growth slowing pnghttps://tmsnrt.rs/2R10yI5

Central Europe growth slowing interactivehttps://tmsnrt.rs/2qMFUkq

(Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague and Marton Dunai in Budapest; Editing by Catherine Evans)

((alan.charlish@thomsonreuters.com; +48 22 653 9723;))

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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