CEE MARKETS-Czech crown regains ground, shakes off political wobbles
By Krisztina Than BUDAPEST, May 3 The Czech crown regained ground on Wednesday, a day after Prime Minister Bohuslav Sobotka announced that he would resign along with his government, while other currencies in the region were also steady or slightly firmer. With investors cautious ahead of the U.S. Federal Reserve's two-day policy meeting, which could give clues regarding rate hikes, stock markets mostly dropped. Budapest led losses, easing 0.7 percent by 0914 GMT. Sunday's second round of the French presidential election added to global risks. After easing a little on Tuesday after Sobotka said his government would resign by mid-May following a row with finance minister Andrej Babis over Babis's past business dealings, the Czech crown firmed 0.15 percent on Wednesday to 26.868 per euro. "EURCZK attempted to go slightly weaker at first (yesterday) but quickly reverted ... back to previous levels, and we do not expect any more major reaction as the story is hardly likely to change the economic path of the country," Komercni Banka trader Dalimil Vyskovsky said. Hungary's forint was flat. Polish markets are closed on Wednesday. Sobotka has said he will seek a meeting with President Milos Zeman to agree timing for the resignation and further steps. He said the coalition could be recreated without Babis, or that an election due in October could be moved forward. Despite the political wobbles, the crown is seen gaining more than 4 percent against the euro in the coming year, lifted by strong economic growth and likely monetary tightening, a Reuters poll published on Wednesday showed. After the Czech central bank's removal a month ago of the cap which had kept the currency weaker than 27 against the euro since 2013, the crown could outperform regional peers, the poll suggested. Czech bonds have meanwhile been supported by their inclusion in JP Morgan's emerging markets index, which means index-tracking investors will need to buy them for their portfolios. Central Europe's economies outperformed western European economies last year and growth is seen strong this year as well, helped by a solid inflow of European Union development funds and loose monetary policies by local central banks. CEE SNAPS AT 1115 MARKETS HOT CET CURRENCIES Lates Previ Daily Chang t ous e bid close chang in e 2017 Czech crown 26.86 26.90 +0.1 0.52% 80 90 5% Hungary 312.2 312.1 -0.01 -1.08 forint 000 800 % % Polish 4.202 4.205 +0.0 4.79% zloty 5 0 6% Romanian 4.550 4.549 -0.01 -0.33 leu 0 4 % % Croatian 7.447 7.455 +0.1 1.44% kuna 5 5 1% Serbian 123.0 123.1 +0.0 0.24% dinar 500 200 6% Note: daily calculate previ close 1800 change d from ous at CET STOCK S Lates Previ Daily Chang t ous e close chang in e 2017 Prague 997.2 1001. -0.48 +8.2 2 98 % 0% Budapest 32680 32902 -0.68 +2.1 .00 .62 % 2% Bucharest 8239. 8220. +0.2 +16. 02 10 3% 29% Ljubljana 778.3 782.3 -0.50 +8.4 8 2 % 7% Zagreb 1894. 1902. -0.43 -5.04 38 57 % % Belgrade 5 4 3% 9% Sofia 666.1 660.5 +0.8 +13. 3 3 5% 59% BONDS Yield Yield Sprea Daily d (bid) chang vs chang e Bund e in Czech sprea Republic d 2-year 1 9 bps s 5-year 4 bps 10-year bps s FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M inter bank Czech Rep < 0.33 0.39 0.5 0 PRIBOR=> Hungary < 0.25 0.33 0.45 0.16 BUBOR=> Note: FRA are for quotes ask prices ************************************************** ************ (Additional reporting by Jason Hovet in Prague; Editing by Catherine Evans)