CEE MARKETS-Forint at five-month low, but turnaround seen in next 12 months

    By Marton Dunai
    BUDAPEST, Sept 4 (Reuters) - Emerging European assets moved
sideways on Friday morning, with the forint extending recent
losses and nearing 360 against the euro, its weakest since
climbing back from a record low set during the first wave of the
coronavirus in April.
    The Czech crown and the Polish zloty both hit six-week lows.
    The Hungarian currency, a deep underperformer in the region
this year, should gain the most on a 12-month horizon, according
to a fresh Reuters poll.
    In the nearer term, however, fiscal and monetary response is
plausible in Hungary as a second wave of the COVID-19 pandemic
grows stronger in Europe, according to analysts and
policymakers. 
    Hungary needs to kick-start its economy while fine-tuning
rules to prepare for a second wave of the pandemic, Prime
Minister Viktor Orban said on Friday.
    The National Bank of Hungary's (NBH) chief said the fiscal
strings could be loosened in the next two years, with the bank's
easing bias adding to the forint's weakness.    
    "The NBH acknowledged that its optimistic June growth
forecast will need to be revised down," Morgan Stanley said in a
note, adding that two more 15bp cuts by early 2021 were likely
despite a central bank indication to hold fire.
    Hungary faces disinflation, which usually allows rate cuts,
while inflation was stabilising in Poland, the region's largest
economy, it added.
    Data showed on Friday that a recovery in industrial output
slowed considerably in July, so the economy still has a lot of
ground to cover, ING economist Peter Virovacz said in a note. 

    "Right now, the volume of industry output is at 2017
levels," he said. "The stock of orders looks good, though, so in
an ideal case, output can come close to a pre-crisis level by
year-end."
    
    
    
            CEE        SNAPSHOT    AT  1028 CET                      
            MARKETS                                          
                       CURRENCIE                                     
                       S                                     
                       Latest     Previous         Daily     Change
                       bid        close            change    in 2020
 Czech                   26.4000          26.3970    -0.01%    -3.67%
 crown                                                       
 Hungary                359.3000         359.1500    -0.04%    -7.84%
 forint                                                      
 Polish                   4.4435           4.4411    -0.05%    -4.21%
 zloty                                                       
 Romanian                 4.8480           4.8500    +0.04%    -1.23%
 leu                                                         
 Croatian                 7.5400           7.5353    -0.06%    -1.25%
 kuna                                                        
 Serbian                117.5000         117.5600    +0.05%    +0.06%
 dinar                                                       
 Note:      calculated from                        1800 CET          
 daily                                                       
 change                                                      
                                                                     
                       Latest     Previous         Daily     Change
                                  close            change    in 2020
 Prague                   904.11         901.7600    +0.26%   -18.96%
 Budapest               34775.63         34778.20    -0.01%   -24.54%
 Warsaw                  1759.31          1769.19    -0.56%   -18.18%
 Bucharest               9029.66          9055.33    -0.28%    -9.50%
 Ljubljana                849.86           853.99    -0.48%    -8.21%
 Zagreb                  1607.74          1624.65    -1.04%   -20.31%
 Belgrade   <.BELEX15     695.12           696.30    -0.17%   -13.29%
            >                                                
 Sofia                    435.17           434.77    +0.09%   -23.40%
                                                                     
                       Yield      Yield            Spread    Daily
                       (bid)      change           vs Bund   change
                                                             in
 Czech                                                       spread
 Republic                                                    
   2-year   <CZ2YT=RR     0.1830           0.0310   +088bps     +4bps
            >                                                
   5-year   <CZ5YT=RR     0.6870          -0.0010   +139bps     -1bps
            >                                                
   10-year  <CZ10YT=R     1.1050           0.0180   +158bps     +0bps
            R>                                               
 Poland                                                              
   2-year   <PL2YT=RR     0.1710           0.0220   +087bps     +3bps
            >                                                
   5-year   <PL5YT=RR     0.7170          -0.0040   +142bps     -1bps
            >                                                
   10-year  <PL10YT=R     1.3780           0.0010   +185bps     -1bps
            R>                                               
            FORWARD                                                  
                       3x6        6x9              9x12      3M
                                                             interban
                                                             k
 Czech Rep          <       0.37             0.38      0.44      0.34
            PRIBOR=>                                         
 Hungary            <       0.78             0.83      0.87      0.62
            BUBOR=>                                          
 Poland             <       0.22             0.22      0.22      0.23
            WIBOR=>                                          
 Note: FRA  are for ask prices                                       
 quotes                                                      
 **********************************************************          
 ****                                                        
 

 (Reporting by Marton Dunai; Editing by Devika Syamnath)
  
 
 

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