CEE MARKETS-Forint hits one-month low before Hungary rate meeting, shares firm on vaccine hopes

    By Anita Komuves
    BUDAPEST, Aug 25 (Reuters) - The Hungarian forint weakened
to a one-month low on Tuesday ahead of the central bank's
meeting where analysts expect no rate change but markets will be
closely watching the bank's comments on inflation and economic
recovery. 
    The forint weakened 0.37% and was trading at
353.20 per euro, under pressure from dismal second-quarter GDP
data, high inflation and loose monetary policy, analysts said.  
    The rate decision by the National Bank of Hungary (NBH) will
be announced at 1200 GMT, followed by a statement at 1300 GMT. 
According to a Reuters poll of economists, the bank is likely to
leave interest rates unchanged. 
    However, investors will be watching the NBH's comments on
the higher-than-expected, annual 3.8% inflation in July and the
13.6% year-on-year drop in second-quarter GDP, analysts said. 
    Deputy Governor Barnabas Virag will hold an online briefing
from 1330 GMT. 
    If the bank's statement puts more emphasis on economic
recovery than on the rise in inflation, that could put further
pressure on the forint which has already underperformed its
regional peers in the past few weeks, Erste Bank said in a note.
    "If the central bank were to sound more dovish the downward
trend in HUF might continue in the near future," Commerzbank
wrote.
    The forint has lost 2.5% of its value this month while the
Polish zloty and the Czech crown have each eased 0.6% in August.
    The zloty firmed 0.12% on the day to 4.3891 versus
the euro while the Czech crown was stable and trading
at 26.111 per euro. 
    "The Czech koruna is currently trading close to our target
of EUR/CZK 26.0 for the end of the year," Raiffeisen said.  
    However, it is "not going to appreciate to the levels we
have seen before the pandemic shock. The reason for this is that
the interest rate differential with the euro area declined
significantly."
    Shares in the region firmed, tracking their European peers
which strengthened on hopes of a U.S.-China trade deal and news
about COVID-19 vaccine developments.
    Prague's stock market led gains, firming 1.23% while
Bucharest's blue chip index was up 0.72%. Warsaw's
equities gained 0.22% and Budapest was up by
0.09%.
        
                     CEE       SNAPSHO   AT                     
                     MARKETS   T        1025             
                                        CET              
                               CURRENC                          
                               IES                       
                               Latest   Previou  Daily   Change
                                        s                
                               bid      close    change  in 2020
 EURCZK=  Czech      <EURCZK=  26.1110  26.1000  -0.04%   -2.60%
          crown      >                                   
 EURHUF=  Hungary    <EURHUF=  353.200  351.900  -0.37%   -6.24%
          forint     >               0        0          
 EURPLN=  Polish     <EURPLN=   4.3891   4.3945   +0.12   -3.02%
          zloty      >                                %  
 EURRON=  Romanian   <EURRON=   4.8390   4.8395   +0.01   -1.05%
          leu        >                                %  
 EURHRK=  Croatian   <EURHRK=   7.5310   7.5325   +0.02   -1.14%
          kuna       >                                %  
 EURRSD=  Serbian    <EURRSD=  117.500  117.600   +0.09   +0.06%
          dinar      >               0        0       %  
          Note:      calculated from             1800           
          daily                                  CET     
          change                                         
                                                                
                               Latest   Previou  Daily   Change
                                        s                
                                        close    change  in 2020
 .PX      Prague                911.05  899.940   +1.23  -18.34%
                                              0       %  
 .BUX     Budapest             36025.8  35994.8   +0.09  -21.82%
                                     4        3       %  
 .WIG20   Warsaw               1845.58  1841.46   +0.22  -14.16%
                                                      %  
 .BETI    Bucharest            8799.97  8737.14   +0.72  -11.80%
                                                      %  
 .SBITOP  Ljubljana  <.SBITOP   853.61   854.80  -0.14%   -7.80%
                     >                                   
 .CRBEX   Zagreb               1614.69  1609.00   +0.35  -19.96%
                                                      %  
 .BELEX1  Belgrade   <.BELEX1   692.10   692.10   +0.00  -13.67%
 5                   5>                               %  
 .SOFIX   Sofia                 434.88   435.17  -0.07%  -23.46%
                                                                
                               Yield    Yield    Spread  Daily
                               (bid)    change   vs      change
                                                 Bund    in
          Czech                                          spread
          Republic                                       
 CZ2YT=R    2-year   <CZ2YT=R   0.1260   0.0080   +079b    +0bps
 R                   R>                              ps  
 CZ5YT=R    5-year   <CZ5YT=R   0.6770  -0.0180   +135b    -3bps
 R                   R>                              ps  
 CZ10YT=    10-year  <CZ10YT=   0.9850  -0.0270   +145b    -5bps
 RR                  RR>                             ps  
          Poland                                                
 PL2YT=R    2-year   <PL2YT=R   0.1490   0.0000   +082b    -1bps
 R                   R>                              ps  
 PL5YT=R    5-year   <PL5YT=R   0.7720   0.0070   +145b    -1bps
 R                   R>                              ps  
 PL10YT=    10-year  <PL10YT=   1.3660   0.0180   +183b    -1bps
 RR                  RR>                             ps  
                     FORWARD                                    
                               3x6      6x9      9x12    3M
                                                         interba
                                                         nk
          Czech Rep               0.36     0.36    0.42     0.34
                     <PRIBOR=                            
                     >                                   
          Hungary                 0.81     0.87    0.94     0.61
                                                         
          Poland                  0.23     0.25    0.26     0.23
                                                         
          Note: FRA  are for ask                                
          quotes     prices                              
          *********************************************         
          *****************                              
 

 (Additional reporting by Jason Hovet in Prague
Editing by Susan Fenton)
  
 
 

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