Czech FX, bonds in vogue despite escalating spy row



By Anita Komuves and Marton Dunai

BUDAPEST, April 21 (Reuters) - Emerging European assets were mixed on Wednesday morning as global investors braced for a new challenge from the COVID-19 pandemic, with Czech assets successfully weathering a diplomatic storm with Russia.

The crown EURCZK= was narrowly stronger in morning trading while other currencies slid or treaded water.

Czech bonds were welcomed by investors, helping Prague pre-finance 2021 targets. The Finance Ministry will auction two bonds after already hitting more than half of its 2021 borrowing target.

"In today's auction, we expect very strong demand as (an) oversupply story seems rather worn... spreads have narrowed off their highs and the bids have been much stronger," Komercni Banka trader Marek Lesko said in a client note.

The market confidence comes amid an escalating row between the Czech Republic and Russia over alleged spying from Moscow.

The Czech Republic will ask allies to follow Prague and expel Russian intelligence officers from their countries, acting Foreign Minister Jan Hamacek said on Tuesday.

In Poland, stronger-than-expected wage and industry output growth left markets largely unfazed.

"The EUR/PLN exchange rate will probably fluctuate around 4.55, awaiting impulses in the coming days," Bank Millennium said in a note to clients.

Elsewhere on emerging markets, stocks and currencies fell on Wednesday as renewed concerns over spiking coronavirus cases rekindled doubts about the speed and strength of a global economic recovery.

"Markets have been risk-averse in the past two days, U.S. stocks indices are down, and FX markets have started to price that in as well," a Budapest-based trader said, noting the slight underperformance of the forint was unremarkable.

Regional stocks also slid, although Hungary's equities outperformed the region slightly, with drug maker Richter leading the way with a 1.8% gain.

"Richter has pulled the market since Tuesday with no real news to fuel the gains, but the overall index bounced back from technical levels even as Richter continued to gain," a trader said.

CEE

SNAPSHOT

AT 1037

MARKETS

CET

CURRENCIE

S

Latest

Previous Daily

Change

bid

close

change

in 2021 Czech

EURCZK=

25.8900

25.9300

+0.15%

+1.31% crown

Hungary

EURHUF=

362.0000 361.0600

-0.26%

+0.20% forint

Polish

EURPLN=

4.5530

4.5503

-0.06%

+0.14% zloty

Romanian

EURRON=

4.9269

4.9275

+0.01%

-1.26% leu

Croatian

EURHRK=

7.5755

7.5755

+0.00%

-0.37% kuna

Serbian

EURRSD=

117.4500 117.5500

+0.09%

+0.10% dinar

Note:

calculated from

1800 CET

daily

change

Latest

Previous Daily

Change

close

change

in 2021 Prague

.PX

1097.69 1102.2200

-0.41%

+6.87% Budapest

.BUX

42733.39 42597.26

+0.32%

+1.49% Warsaw

.WIG20

1973.27

1987.76

-0.73%

-0.54% Bucharest .BETI

11152.25 11137.75

+0.13% +13.73% Ljubljana .SBITOP

1052.74

1051.49

+0.12% +16.86% Zagreb

.CRBEX

1879.28

1879.46

-0.01%

+8.05% Belgrade <.BELEX15

769.93

768.42

+0.20%

+2.85%

>

Sofia

.SOFIX

518.84

521.54

-0.52% +15.93%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund change

in Czech

spread Republic

2-year <CZ2YT=RR

0.6550

0.0270 +135bps

+3bps

>

5-year <CZ5YT=RR

1.3950

-0.0440 +200bps

-5bps

>

10-year <CZ10YT=R

1.8070

-0.0570 +206bps

-6bps

R>

Poland

2-year <PL2YT=RR

0.1260

0.0090 +082bps

+1bps

>

5-year <PL5YT=RR

0.9300

-0.0010 +153bps

+0bps

>

10-year <PL10YT=R

1.5790

0.0250 +183bps

+2bps

R>

FORWARD

3x6

6x9

9x12

3M

interban

k Czech Rep CZKFRA <

0.42

0.62

0.89

0.36

PRIBOR=>

Hungary

HUFFRA <

0.98

1.11

1.23

0.79

BUBOR=>

Poland

PLNFRA <

0.26

0.31

0.43

0.21

WIBOR=>

Note: FRA are for ask prices

quotes

****************************************************

**********


Editing by Krishna Chandra Eluri

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