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CEE MARKETS-Currencies seek direction ahead of U.S. election, c.bank meetings

Anita Komuves
·4 min read

By Anita Komuves BUDAPEST, Oct 30 (Reuters) - Central European currencies hardly moved on Friday, after steep losses earlier this week, as investors shifted focus to the U.S. presidential election and central bank meetings in Poland and the Czech Republic next week. A steep rise in coronavirus cases and fresh lockdown measures in Europe have put pressure on regional currencies this month. The Polish zloty lost 1.9% of its value versus the euro in October. The Hungarian forint fell 1.1% this month while the Czech crown was down 0.8%. The second wave of the pandemic "could usher in additional support from central banks – mostly in the form of QE," Morgan Stanley wrote in a note. The National Bank of Poland (NBP) holds its rate-setting meeting on Nov 4 and the Czech central bank meets on Nov 5. Morgan Stanley expects the NBP to keep its policy rate at 0.10% at the upcoming meeting and to continue to rely on QE. They expect the Czech National Bank to ease further, using a rate cut and QE as well, "if not in November then most likely in December." Several board members said in recent weeks the Czech central bank does not need to adjust its policy as inflation, above the central bank's 1%-3% target band, was being offset by the impact of coronavirus restrictions. Data showed on Friday that the Czech economy expanded by 6.2% in the third quarter versus the previous three months, beating expectations. On a year-on-year basis, the economy fell by 5.8% in real terms. The Czech crown firmed 0.18% on the day to 27.295 versus the common currency, while the Polish zloty was unmoved and trading at 4.6180. The Hungarian forint was flat at around 367.50 per euro. The currency fell to near its all-time-low of 369.54 in the previous session. The central bank of Hungary could hike its one-week deposit rate if the currency started falling in an uncontrolled manner, CIB Bank wrote in a note. The bank kept the interest rate on its one-week deposit facility unchanged at 0.75% on Thursday. Hungary's economy is expected to shrink by 6.0-6.5% this year, Finance Minister Mihaly Varga said on Friday. Stock markets were mixed, with Budapest's equities gaining 0.6% while Warsaw lost 1.91%. Prague's blue chip index slid 0.3% while Bucharest was down 0.37%. CEE SNAPSHO AT MARKETS T 1140 CET CURRENC IES Latest Previous Daily Change bid close change in 2020 EURCZK= Czech <EURCZK= 27.2950 27.3450 +0.18% -6.83% crown > EURHUF= Hungary <EURHUF= 367.500 367.6400 +0.04% -9.89% forint > 0 EURPLN= Polish <EURPLN= 4.6180 4.6178 -0.00% -7.83% zloty > EURRON= Romanian <EURRON= 4.8745 4.8730 -0.03% -1.77% leu > EURHRK= Croatian <EURHRK= 7.5690 7.5745 +0.07% -1.63% kuna > EURRSD= Serbian <EURRSD= 117.500 117.6000 +0.09% +0.06 dinar > 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2020 .PX Prague 846.30 848.8500 -0.30% -24.14 % .BUX Budapest 32240.7 32047.68 +0.60% -30.04 0 % .WIG20 Warsaw 1513.29 1542.76 -1.91% -29.62 % .BETI Buchares 8523.83 8555.65 -0.37% -14.57 t % .SBITOP Ljubljan <.SBITOP 790.51 790.56 -0.01% -14.62 a > % .CRBEX Zagreb 1565.31 1561.81 +0.22% -22.41 % .BELEX1 Belgrade <.BELEX1 701.04 693.99 +1.02% -12.55 5 5> % .SOFIX Sofia 425.57 424.09 +0.35% -25.09 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT=R 2-year <CZ2YT=R 0.0270 0.0840 +083bp +8bps R R> s CZ5YT=R 5-year <CZ5YT=R 0.5690 0.0010 +139bp -1bps R R> s CZ10YT= <CZ10YT= 1.0000 0.0100 +163bp +0bps RR 10-year RR> s Poland PL2YT=R 2-year <PL2YT=R -0.0050 0.0040 +080bp +0bps R R> s PL5YT=R 5-year <PL5YT=R 0.3540 -0.0250 +118bp -3bps R R> s PL10YT= <PL10YT= 1.1240 -0.0270 +176bp -3bps RR 10-year RR> s FORWARD 3x6 6x9 9x12 3M interb ank Czech 0.28 0.23 0.24 0.35 Rep <PRIBOR= > Hungary 0.93 0.98 1.01 0.77 Poland 0.16 0.14 0.14 0.22 Note: are for ask FRA prices quotes ********************************************** **************** (Reporting by Anita Komuves in Budapest, Editing by Ramakrishnan M.)