Zloty, crown jump as GDP data confirm robust CEE growth

Reuters




By Sandor Peto

BUDAPEST, Aug 16 (Reuters) – The zloty led Central Europe’s main currencies higher on Wednesday after figures for the second quarter showed the region’s economic growth remained strong.

Poland’s annual economic growth slowed from 4 percent in the first quarter, but at 3.9 percent was a tick above analysts’ forecasts. The zloty gained half a percent, reaching 4.2732 against the euro at 0928 GMT.

However, the wage increases are fuelled by government policy, which has led to fears of a rise in the budget deficit and inflation. Romania also has a trade deficit, while its main regional peers have surpluses or smaller deficits.

The leu, which is usually slow to react to economic data, was steady at 4.573 versus the euro.

“It (the figures) should be slightly positive for the Romanian leu but negative for government bonds as the output gap looks set to widen further, increasing the chances for inflation to rise even faster than expected,” said Ciprian Dascalu, chief economist at ING in Romania.

A jump in Czech output may also heighten expectations the central bank will continue to tighten policy to fight inflation. Early this month, it became the first in the European Union to raise interest rates since 2012.

“The positive surprise can cause a capital inflow … an increase in the volume of foreign capital in the Czech economy would pose a risk that (the central bank’s) communication will become more hawkish in the coming months,” Erste analyst Jiri Polansky said in a note.

The crown touched its strongest levels since Aug. 4. It firmed 0.4 percent to 26.05.

Hungary’s forint gained 0.2 percent to 303.70, approaching 27-month highs beyond 302.95, even tough Hungary’s annual economic growth slowed to 3.2 percent from 4.2 percent in the first quarter, below forecasts by analysts of 3.7 percent.

“(But) the outlook has not been as good as now for decades,” said Gergely Suppan, analyst of Takarekbank, who has been among the most accurate forecasters of Hungarian economic growth in the past years.










































CEE MARKETS

SNAPSHOT

AT 1128 CET




CURRENCIES





Latest

Previous

Daily

Change



bid

close

change

in 2017

Czech crown

26.0500

26.1535

+0.40%

3.67%

Hungary forint

303.7000

304.1950

+0.16%

1.69%

Polish zloty

4.2732

4.2955

+0.52%

3.06%

Romanian leu

4.5730

4.5740

+0.02%

-0.83%

Croatian kuna

7.3940

7.3935

-0.01%

2.18%

Serbian dinar

119.3400

119.3600

+0.02%

3.36%

Note: daily change

calculated from

previous

close at

1800 CET




STOCKS






Latest

Previous

Daily

Change




close

change

in 2017

Prague

1033.54

1032.50

+0.10%

+12.15%

Budapest

36825.90

36775.94

+0.14%

+15.07%

Warsaw

2393.49

2376.66

+0.71%

+22.87%

Bucharest

8268.32

8334.28

-0.79%

+16.70%

Ljubljana

804.21

805.67

-0.18%

+12.07%

Zagreb

1893.43

1897.51

-0.22%

-5.08%

Belgrade

717.68

715.89

+0.25%

+0.04%

Sofia

732.84

729.28

+0.49%

+24.97%



BONDS






Yield

Yield

Spread

Daily



(bid)

change

vs Bund

change in

Czech Republic





spread

2-year

0.026

0.089

+072bps

+8bps

5-year

0.065

0.006

+030bps

-2bps

10-year

0.877

-0.005

+042bps

-4bps

Poland






2-year

1.862

0.012

+256bps

+0bps

5-year

2.747

0.01

+298bps

-1bps

10-year

3.414

0.017

+296bps

-2bps


FORWARD

RATE

AGREEMENT




3×6

6×9

9×12

3M interbank

Czech Rep

0.59

0.72

0.82

0

Hungary

0.24

0.3

0.36

0.15

Poland

1.766

1.799

1.848

1.73

Note: FRA quotes

are for ask prices





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