Views Article – Sharenet Wealth

Europe, Forex

Currencies rebound as risk sentiment improves

By Alan Charlish WARSAW, Aug 16 (Reuters) – Central European currencies gained on Friday, rebounding after China hinted at more support for its economy and Argentine leaders signalled determination to control an economic crisis. Along with other risk-sensitive emerging-market assets, central European currencies had been hit by worries over global trade and the crisis in Argentina. Signs the region’s economies were cooling heightened the pessimism. “Sentiment for emerging market currencies improved following reports suggesting a decrease in political risk in Argentina,” ING analysts wrote in a note, adding, however, that they expected the Polish zloty to remain under pressure. China’s state planner plans to boost disposable income in 2019 and 2020 to spur consumption, while Argentine President Mauricio Macri announced an end to sales taxes on basic food products until the end of the year to salvage his re-election prospects and end an economic crisis. As of 0755 GMT, the zloty had gained 0.24% against the euro to 4.3586. The Hungarian forint rose 0.12% to 325.16 and the Czech crown was at 25.832, strengthening from 2019 low of 25.907 on Thursday. Polish, Romanian and Croatian markets were closed on Thursday for national holidays, meaning markets were illiquid, which contributed to the zloty’s losses in the previous session. “Foreign investors often take advantage of such moments of poor liquidity for aggressive FX speculation,” Santander Bank Polska analysts said in a note. In the Czech Republic, producer prices slipped 0.1% in July, slowing their year-on-year growth to 2.1%, driven mainly by lower oil prices. The slowdown was more pronounced than the central bank had assumed in its latest quarterly forecast. However, the external environment will keep the central bank from raising interest rates again this year and possibly throughout 2020, Radomir Jac, chief economist at Generali Investments CEE, said in a note. Poland’s central bank will publish net inflation data at 1200 GMT, with analysts forecasting an acceleration to 2.1% year-on-year from 1.9% the previous month. The region’s main stock markets rose in line with their western European peers, with Prague’s PX index up 0.30% and Warsaw’s blue-chip WIG 20 index gaining 0.36%. The Budapest stock index was up 0.56%. Equity markets were helped by positive results overnight by U.S companies, including chip-gear maker Applied Materials and Walmart, which soothed worries about the slowing global economy. Czech 10-year yields rose 2 basis points to 0.925%, while Polish 10-year yields continued to fall, shedding 2.8 basis points to 1.732%. CEE SNAPSHO AT MARKETS T 1110 CET CURRENC IES Latest Previou Daily Change s bid close change in 2019 Czech <EURCZK= 25.7800 25.8560 +0.29% -0.28% crown > Hungary <EURHUF= 324.860 325.490 +0.19% -1.16% forint > 0 0 Polish <EURPLN= 4.3487 4.3770 +0.65% -1.36% zloty > Romanian <EURRON= 4.7270 4.7250 -0.04% -1.54% leu > Croatian <EURHRK= 7.3850 7.3873 +0.03% +0.34% kuna > Serbian <EURRSD= 117.630 117.770 +0.12% +0.57% dinar > 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 Prague 1034.47 1031.03 +0.33% +4.86% 00 Budapest 40207.5 40018.6 +0.47% +2.73% 1 7 Warsaw 2079.59 2078.39 +0.06% -8.65% Bucharest 8985.25 9052.10 -0.74% +21.69 % Ljubljana <.SBITOP 860.75 862.89 -0.25% +7.02% > Zagreb 1888.99 1890.63 -0.09% +8.02% Belgrade <.BELEX1 745.15 744.58 +0.08% -2.17% 5> Sofia 575.15 578.64 -0.60% -3.25% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.0620 0.0700 +196bp +6bps R> s 5-year <CZ5YT=R 0.7250 -0.0060 +164bp -2bps R> s 10-year <CZ10YT= 0.9270 0.0220 +163bp +2bps RR> s Poland 2-year <PL2YT=R 1.4940 -0.0170 +239bp -3bps R> s 5-year <PL5YT=R 1.5850 -0.0430 +250bp -6bps R> s 10-year <PL10YT= 1.7370 -0.0230 +244bp -2bps RR> s FORWARD RATE AGREEME NT 3×6 6×9 9×12 3M interba nk Czech Rep 2.02 1.76 1.56 2.14 <PRIBOR= > Hungary 0.30 0.29 0.30 0.26 Poland 1.69 1.62 1.54 1.72 Note: FRA are for ask quotes prices ********************************************** **************** (Reporting by Alan Charlish in Warsaw, Jan Lopatka in Prague and Krisztina Than in Budapest; editing by Larry King)

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