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.
in 2021 Czech
in 2021 Prague
-0.54% Bucharest .BETI
+0.13% +13.73% Ljubljana .SBITOP
+0.12% +16.86% Zagreb
+8.05% Belgrade <.BELEX15
vs Bund change
k Czech Rep CZKFRA <
Note: FRA are for ask prices
Editing by Krishna Chandra Eluri
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