CEE MARKETS-Currencies firm up on possible delay in U.S. car tariffs

* Possible delay in U.S. tariffs on auto imports helps
* Forint lags zloty, crude price rise highlights CPI concern
* Equities are mixed, oil stocks rise in Budapest and Warsaw

By Sandor Peto
BUDAPEST, May 16 (Reuters) – Central European currencies
firmed up on Thursday on a report that U.S. President Donald
Trump planned to delay a decision that would have imposed
tariffs on auto imports from Europe.
The region’s currencies and the euro had jumped late
on Wednesday after a Bloomberg report on a possible six-month
postponement by Trump from a May 18 deadline.
The auto industry and its exports are a key driver of
economic growth in Central Europe, as well as surging wages
which boost domestic demand.
The zloty rebounded from two-month lows against
the euro, and by Thursday it returned to the firm side of the
4.3 line, testing its 200-day moving average.
Trading at 4.2935 at 0923 GMT, it was firmer by 0.2%, even
though the Polish central bank played down the rise in inflation
in recent months at its meeting on Wednesday.
Its Governor Adam Glapinski said there was no need to change
interest rates until the end of the Monetary Policy Council’s
term in 2022.
Running at 2.2% in April, Polish annual inflation is still
well within the central bank’s 1.5-3.5% target range.
In Romania, however, inflation has exceeded a similar
target, and Hungary’s 3.9% rate has approached the top of the
2%-4% target range.
The forint also tracked the regional firming,
rebounding from a seven-month low of 325.8 versus the euro on
Wednesday, but it lost steam on Thursday, trading at 324.25.
It eased against the zloty, and bid around 75.5 it
approached 7-1/2-month lows.
“The Romanian central bank hinted at some tightening
(through managing market liquidity) at its meeting yesterday…
but there is no sign that the Hungarian central bank would
change policy,” said Peter Virovacz, analyst of ING in Budapest.
A rise in crude prices can push inflation further
up. The forint is also vulnerable as Hungary’s real interest
rates are the lowest in the region while its economic growth is
the fastest based on first-quarter data released on Wednesday,
he said.
“There is no risk in shorting the forint,” he added.
Central European stocks were mixed.
Only the Prague bourse tracked a fall in European shares
after the U.S. government imposed sanctions on Chinese
telecoms giant Huawei.
A rebound in OTP Bank shares, driven by technical
factors, and in oil group MOL helped Budapest’s
blue-chip index rise 0.6%.
Warsaw’s index was kept in the positive by a rise
in oil group PKN Orlen and copper producer KGHM
. The latter said that it may pay a dividend on its 2019

Latest Previous Daily Change
bid close change in 2019
Czech <EURCZK= 25.6950 25.7200 +0.10% +0.05%
crown >
Hungary <EURHUF= 324.2500 324.5500 +0.09% -0.98%
forint >
Polish <EURPLN= 4.2935 4.3032 +0.23% -0.09%
zloty >
Romanian <EURRON= 4.7620 4.7620 +0.00% -2.27%
leu >
Croatian <EURHRK= 7.4210 7.4205 -0.01% -0.15%
kuna >
Serbian <EURRSD= 117.8500 117.9600 +0.09% +0.38%
dinar >
Note: calculated from 1800 CET

Latest Previous Daily Change
close change in 2019
Prague 1049.04 1052.070 -0.29% +6.33%
Budapest 40522.79 40291.35 +0.57% +3.54%
Warsaw 2172.82 2169.18 +0.17% -4.56%
Bucharest 8178.13 8174.16 +0.05% +10.76%
Ljubljana <.SBITOP 864.62 863.47 +0.13% +7.51%
Zagreb 1841.68 1837.12 +0.25% +5.31%
Belgrade <.BELEX1 731.86 733.01 -0.16% -3.92%
Sofia 566.91 566.36 +0.10% -4.63%
Yield Yield Spread Daily
(bid) change vs Bund change
Czech spread
2-year <CZ2YT=R 1.5930 -0.1900 +225bps -19bps
5-year <CZ5YT=R 1.6990 0.0120 +222bps +2bps
10-year <CZ10YT= 1.8000 -0.0430 +191bps -3bps
2-year <PL2YT=R 1.6520 -0.0040 +231bps +0bps
5-year <PL5YT=R 2.2280 0.0050 +275bps +1bps
10-year <PL10YT= 2.8540 0.0070 +297bps +2bps
3×6 6×9 9×12 3M
Czech Rep 2.22 2.22 2.18 2.20
Hungary 0.35 0.52 0.69 0.16

Poland 1.75 1.74 1.76 1.72

Note: FRA are for ask prices

(Reporting by Sandor Peto; Editing by Hugh Lawson)

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