CEE MARKETS-Zloty, crown lead FX gains; Czech bonds face test at auction

Colt CZ SE

20/09/2023 10:03

By Boldizsar  Gyori
       BUDAPEST, Sept 20 (Reuters) - Central European
currencies firmed on Wednesday, with the zloty and crown leading
gains, recovering from losses after a large-than-expected Polish
rate cut earlier this month spilled negative sentiment across
the region.
    Czech bonds face an investor test at an auction on Wednesday
after recent market turbulence that has seen the yield on the
10-year benchmark bond climb 16 basis points this month.
    The Polish zloty  EURPLN=  was up 0.2% versus the euro, to
trade at 4.65 as of 0819 GMT, rebounding from losses earlier in
the session. 
    "The zloty (...) is now timidly starting to make up its
losses. This is the result of this morning's interview of the
president of the National Bank of Poland," Bank Millennium said
in a note.
    Polish central bank governor Adam Glapinski told news agency
PAP Biznes that after cutting interest rates in September, the
space for further reductions has narrowed significantly.
    "As a result, the market is erasing some of the expectations
regarding the scale of the monetary easing cycle, which benefits
the Polish currency."
    In recent weeks, a firmer dollar and increased bets on Czech
rate cuts in the wake of Poland's move weighed on the Czech
currency.
    The Czech crown  EURCZK=  traded at 24.39 to the euro. 
    "The environment for the Czech crown will stay rather
challenging," CSOB said in a note.  
    The Czechs will hold a regular bond auction, offering three
papers, with results due midday. 
    "Czech bonds remain under pressure as the negative sentiment
in Polish assets spilled over to CZK and so the auction is going
to be an important bellwether indicating if the current ASW
levels and elevated notional levels can attract aggressive
interest," Komercni Banka trader Marek Lesko said in a preview
note. 
    "If not, the bonds may continue to struggle." 
    Hungary's forint  EURHUF=  traded sideways at 383.3 versus
the euro on a lack of domestic cues, with investors eyeing the
Fed's rate decision, scheduled to come out after local markets
close. 
    
                    CEE       SNAPSHO   AT                      
                    MARKETS   T        1019              
                                       CET               
                              CURRENC                           
                              IES                        
                              Latest   Previou  Daily    Change
                                       s                 
                              bid      close    change   in 2023
 EURCZK=  Czech                                         
 EURHUF=  Hungary                  0        0           
 EURPLN=  Polish                                        
 EURRON=  Romanian                                      
 EURRSD=  Serbian                  0        0           
          Note:     calculated from             1800            
          daily                                 CET      
          change                                         
                                                                
                              Latest   Previou  Daily    Change
                                       s                 
                                       close    change   in 2023
 .PX      Prague     .PX      1346.34  1345.53   +0.06%   +12.03
                                            00                 %
 .BUX     Budapest   .BUX     57510.6  57699.7   -0.33%   +31.32
                                    2        8                 %
 .WIG20   Warsaw     .WIG20   1940.94  1930.86   +0.52%   +8.31%
 .BETI    Buchares   .BETI    14361.3  14322.7   +0.27%   +23.13
          t                         2        7                 %
                                                                
                                                Spread   Daily
                                                vs Bund  change
                                                         in
          Czech                                          spread
          Republic                                       
 CZ2YT=R    2-year                                  s  
 CZ5YT=R    5-year                                  s  
 CZ10YT=                                           s  
          Poland                                                
 PL2YT=R    2-year                                  s  
 PL5YT=R    5-year                                  s  
 PL10YT=                                           s  
                    FORWARD                                     
                              3x6      6x9      9x12     3M
                                                         interba
                                                         nk
          Czech      CZKFRA      6.87     5.84     4.87     7.08
          Rep                                           
          Hungary    HUFFRA     10.53     9.00     7.99    12.75
                     BUBOR=                              
          Poland     PLNFRA      4.98     4.35     4.13     5.80
                     WIBOR=                              
          Note:     are for ask                                 
          FRA       prices                               
          quotes                                         
          *********************************************         
          *****************                              
 
      
  

 (Reporting by Boldizsar Gyori in Budapest; Editing by Sonia
Cheema)
 ((boldizsar.gyori@thomsonreuters.com;))
 
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