KBC Market Research Desk
KBC Bank
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CEE markets stay calm despite tensions in Ukraine …
… demand at bond auctions exceeds expectations
CEE currencies showed yesterday that contagion from Ukraine has not spread to Central Europe, at least for the time being. The Polish zloty together with the Czech koruna oscillated within a narrow band around their today´s values. The forint slightly eased but still remains relatively strong, which may encourage doves in the NBH to push through yet another rate cut at the rate-setting meeting next week.
Purchasers´ interest in recent government bond auctions in the CEE provides fresh ammunition for optimists asserting that the conflict in east Ukraine need not raise major concerns. Yesterday’s government bond auctions in Poland and in the Czech Republic attracted robust demand. Poland received bids in total value of 16.6 bn PLN, which strikingly surpassed the originally planned amount of 6-10 bn PLN. Eventually, Poland sold two- and four-year bonds in nominal value as high as 11.7 bn PLN. Also in the Czech Republic, investors´ huge appetite for bonds, translated into demand close to 20 bn CZK, highly exceeded issuer´s capacity. The Ministry of Finance sold bonds for just 11 bn CZK maturing in 2019, 2025 and 2036. Let us recall that also last week´s bond auction in Hungary was successful and also in other CEE countries, like Slovenia and Romania, recent bond auctions attracted robust demand
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This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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