Views Article – Sharenet Wealth

Europe, Forex

Assets ease across Central Europe amid global gloom

By Krisztina Than BUDAPEST, Aug 5 (Reuters) – Central European assets extended falls on Monday morning as global markets were gripped by concerns over an escalation of the U.S.-China trade war, which has boosted risk aversion. Local factors had little role in driving emerging markets in the European Union’s eastern wing on Monday. Stock markets fell, and currencies eased across the board. Romania’s central bank is widely expected to keep rates unchanged at 2.5% at a meeting later in the day. Helped by loose policies by major global central banks, Central Europe’s rate-setters have adopted a wait-and-see mode lately despite a rise in inflation earlier this year. “The new week begins with continuing negative moods. The escalation of trade wars and concerns about global economic growth, fueled by successive U.S. tariffs imposed on China have a negative impact on market sentiment,” Bank Millennium said in a note. “The zloty remains under pressure to weaken.” The bank said the continuation of risk aversion could result in a further easing of the Polish currency towards the next technical barrier which is at 4.34 versus the euro. The Hungarian forint was hovering around 327.60 to the euro and some analysts said the currency could head towards all-time lows around 330 if negative sentiment prevails. At 0813 GMT, the forint was down 0.16% against the euro at 327.60. The Polish zloty shed 0.24% to 4.3165. The Czech crown was at 25.7710, flat from Friday’s closing. “The crown remains at weaker levels around 25.75 per euro, where it got after a hawkish Fed and the announcement of a new wave of U.S. tariffs against China. Trade wars will be a theme for the region this week too and we assume that the crown could test once again the level of 25.80,” CSOB analysts said in a morning note. Last Thursday, the Czech National Bank (CNB) left its two-week repo rate at 2.00%, and signalled rates would remain unchanged in coming quarters, as momentum in the domestic economy offsets monetary easing abroad. Coming just after Federal Reserve Chairman Jerome Powell suggested the first U.S rate cut in over a decade was not the start of a lengthy series, U.S. President Donald Trump’s announcement on Thursday about new tariffs on Chinese imports was a fresh blow to risk-sensitive emerging-market assets. CEE SNAPSHOT AT MARKETS 0959 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.7710 25.7600 -0.04% -0.25% crown Hungary 327.6000 327.0700 -0.16% -1.99% forint Polish 4.3165 4.3060 -0.24% -0.62% zloty Romanian 4.7333 4.7300 -0.07% -1.68% leu Croatian 7.3800 7.3805 +0.01% +0.41% kuna Serbian 117.5800 117.7000 +0.10% +0.61% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1031.78 1040.370 -0.83% +4.58% 0 Budapest 40137.10 40309.61 -0.43% +2.55% Warsaw 2199.52 2216.51 -0.77% -3.39% Bucharest 9041.53 9068.90 -0.30% +22.45% Ljubljana 867.26 870.99 -0.43% +7.83% Zagreb 1904.28 1904.28 +0.00% +8.89% Belgrade <.BELEX15 734.81 738.32 -0.48% -3.53% > Sofia 581.59 580.08 +0.26% -2.16% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.0470 -0.0080 +184bps +0bps > 5-year <CZ5YT=RR 1.0220 0.0420 +180bps +6bps > 10-year <CZ10YT=R 1.0890 -0.0150 +161bps +1bps R> Poland 2-year <PL2YT=RR 1.5250 -0.0180 +232bps -1bps > 5-year <PL5YT=RR 1.7600 -0.0640 +254bps -5bps > 10-year <PL10YT=R 2.0410 -0.0540 +256bps -3bps R> FORWARD RATE AGREEMEN T 3×6 6×9 9×12 3M interban k Czech Rep < 2.11 1.97 1.84 2.16 PRIBOR=> Hungary < 0.32 0.36 0.40 0.26 BUBOR=> Poland < 1.73 1.70 1.69 1.72 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ For related news and prices, click on the codes in brackets: All emerging market news Spot FX rates Eastern Europe spot FX Middle East spot FX Asia spot FX Latin America spot FX Other news and reports World central bank news Economic Data Guide Official rates Emerging Diary Top events Diaries Diaries Index (Reporting by Krisztina Than, additional reporting by Alan Charlish in Warsaw and Robert Muller in Prague; Editing by Andrew Cawthorne)

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