Crown firms after data, Serbia holds rates, buying dinar
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Crown firms after data, Serbia holds rates, buying dinar
* Czech Oct industrial output surges by more than 10 pct
* Crown is off 3-week low, timing and scope of rate hikes
mulled
* Serbian central bank keeps rates on hold, buys dinar in
market
* Prague, Budapest, Bucharest debt auctions draw sound
demand

(Adds Serbian central bank decision, market intervention,
government debt auctions)
By Sandor Peto and Robert Muller
BUDAPEST/PRAGUE, Dec 7 (Reuters) - The crown
rebounded from 3-week lows and demand for Czech Treasury bills
surged at an auction on Thursday as new Czech data underpinned
healthy and balanced economic expansion.
Czechs were a leader of Central Europe's robust growth in
the third quarter, with 5 percent annual output rise.
Thursday's October data showed 10.5 percent annual surge in
Czech industrial output, and the trade account remained in a
surplus.
The crown, with 5.5 percent gain versus the euro so far this
year, became the world's top-performing currency in 2017,
boosted by the strong economy and two central bank (CNB) rate
hikes since August.
It firmed to 25.59 by 1416 GMT, after reaching a 3-week low
of 25.696 on Wednesday amid doubts if the CNB continues to raise
rates at its meeting next week.
Investments could rise further next year, said Viktor
Zeisel, analyst at Komercni Banka.
"We expect a (CNB) rate hike in each quarter of the next
year," he added.
A worsening labour shortage forces firms to invest in
efficiency and automation, Erste analyst Jiri Polansky said.
The output data, though it heralds higher wage growth, will
not increase pressure on the CNB to hike rates because a rise in
productivity-enhancing investment moderates inflation, he added.
Analysts expect the crown to lead the forint and
the zloty higher next year.
Hoping for further gains, foreigners keep the huge amount of
crown positions built before the CNB removed a cap at 27 against
the euro in April.
Demand surged at an auction of 19-week Czech Treasury bills,
pushing the yield deeper into the negative, to -0.8 percent.
In Budapest, the past months' slide in government bond
yields to record lows did not curb appetite either.
Thursday's Hungarian bond auctions drew solid demand, just
like Bucharest's 3-year bond tender.
Romanian bond prices got cheap in the past months, sliding
due to worries that robust growth, which reached 8.8 percent in
annual terms in the third quarter, could boost inflation.
A key growth driver in the region is a surge in wages.
Workers had quit by the millions, moving West.
Croatia on Thursday raised its minimum wage and its quota
for foreign workers.
Inflation is less of a worry in Serbia, but its central bank
kept its 3.5 percent main rate, the highest in the region, on
hold on Thursday, fearing that a likely Federal Reserve rate
hike could weigh on the dinar and domestic bonds.
Meanwhile, it continued to sell euros in the market to stem
a weakening of the dinar.

CEE MARKETS SNAPSH AT 1516 CET
OT
CURRENCIES
Latest Previo Daily Change
us
bid close change in
2017
Czech crown 25.590 25.619 +0.12 5.54%
0 5 %
Hungary 314.88 314.46 -0.13% -1.92%
forint 00 50
Polish zloty 4.2140 4.2140 +0.00 4.51%
%
Romanian leu 4.6340 4.6291 -0.11% -2.14%
Croatian 7.5440 7.5472 +0.04 0.15%
kuna %
Serbian 119.65 119.49 -0.13% 3.09%
dinar 00 00
Note: daily calculated previo close 1800
change from us at CET
STOCKS
Latest Previo Daily Change
us
close change in
2017
Prague 1055.9 1053.1 +0.27 +14.5
9 5 % 8%
Budapest 38181. 37591. +1.57 +19.3
17 53 % 0%
Warsaw 2386.0 2394.6 -0.36% +22.4
6 7 9%
Bucharest 7656.5 7670.1 -0.18% +8.07
4 6 %
Ljubljana 779.11 773.03 +0.79 +8.57
% %
Zagreb 1856.1 1853.2 +0.16 -6.95%
2 3 %
Belgrade 742.65 743.97 -0.18% +3.52
%
Sofia 665.36 666.31 -0.14% +13.4
6%
BONDS
Yield Yield Spread Daily
(bid) change vs change
Bund in
Czech spread
Republic
2-year 0.075 0.072 +083b +8bps
ps
5-year 0.807 0.021 +119b +2bps
ps
10-year 1.42 -0.001 +112b +0bps
ps
Poland
2-year 1.656 -0.005 +241b +0bps
ps
5-year 2.651 0.015 +303b +2bps
ps
10-year 3.244 -0.002 +294b +0bps
ps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
interb
ank
Czech Rep <PR 0.99 1.19 1.3 0
IBOR=>
Hungary <BU 0.03 0.06 0.1 0.03
BOR=>
Poland <WI 1.77 1.82 1.92 1.73
BOR=>
Note: FRA are for ask
quotes prices
*********************************************************
*****


(Additional reporting by Radu Marinas in Bucharest)



First Published: 2017-12-07 12:12:12
Updated 2017-12-07 16:58:42



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