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CEE MARKETS-Currencies firm as yields retreat, Polish cenbank meeting in focus

Anita Komuves
·3 min read

By Anita Komuves BUDAPEST, March 3 (Reuters) - Central European currencies recouped some recent losses on Wednesday as U.S. treasury yields retreated, the dollar weakened and risk appetite grew, while markets in the region eyed a central bank meeting in Poland later in the day. "Yields are lower and markets calmed down a bit this week, which helps CEE currencies," a Budapest-based FX trader said. "But investors are still concerned by the threat of inflation and the pandemic, so trade could stay volatile." The Hungarian forint firmed 0.12% to 363.67 versus the common currency, after hitting its lowest this year in the previous session. The currency is unlikely to weaken past the strong resistance at 365 in the short term, traders said. The CEE region is facing a rapid rise in coronavirus cases, with the Czech Republic one of the hardest hit globally, as governments are working to contain the virus while keeping their economies going. Hungary's economy could grow by close to 6% this year, central bank governor Gyorgy Matolcsy said on Wednesday. The Polish zloty was little moved ahead of a central bank rate meeting later in the day, where borrowing costs are expected to remain unchanged. The bank will also release its latest economic forecasts. "Information released since November, in particular the prolonged restrictions on the one hand, and strong exports and progressing vaccinations on the other hand, will not significantly change the forecasts," Bank Millennium wrote. According to Commerzbank, the central bank's rhetoric could "shift towards dovish in reaction to the fresh development of the third pandemic wave in the country." Poland's new daily coronavirus cases have jumped to 15,698 on Wednesday, from 7,937 the day before. The Czech crown was 0.23% stronger on Wednesday, trading at 26.1300 per euro. The Czech finance ministry is set to hold a bond auction, offering 2027, 2031 and 2036 papers at 1100 GMT. Stocks in the region were mixed, with Warsaw gaining nearly 1%, while Prague was unmoved and Budapest slid 0.26%. CEE SNAPSHO AT MARKETS T 1051 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech % EURHUF= Hungary 0 % EURPLN= Polish % EURRON= Romanian % EURHRK= Croatian % EURRSD= Serbian 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1069.84 1069.570 +0.03 +4.16% 0 % .BUX Budapest 44288.9 44402.33 -0.26% +5.18% 5 .WIG20 Warsaw 1978.77 1959.52 +0.98 -0.26% % .BETI Buchares 10275.0 10215.96 +0.58 +4.79% t 8 % .SBITOP Ljubljan <.SBITOP 978.00 975.35 +0.27 +8.56% a > % .CRBEX Zagreb 1845.11 1841.04 +0.22 +6.08% % .BELEX1 Belgrade <.BELEX1 743.09 746.40 -0.44% -0.74% 5 5> .SOFIX Sofia 498.53 498.53 +0.00 +11.40 % % Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT=R 2-year ps CZ5YT=R 5-year ps CZ10YT= ps Poland PL2YT=R 2-year ps PL5YT=R 5-year ps PL10YT= ps FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.43 0.61 0.84 0.36 Rep Hungary 0.89 1.04 0.96 0.77 Poland 0.26 0.29 0.39 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Jan Lopatka in Prague and Alan Charlish in Warsaw; Editing by Shailesh Kuber)