CEE MARKETS-Zloty hit by Swiss franc mortgage ruling

Reuters

WARSAW, Nov 29 (Reuters) - The Polish zloty continued to weaken on Friday after a Polish Supreme Court verdict that investors fear raises the risk that Swiss franc mortgage loans will be converted into the local currency on terms unfavourable to banks. Other regional currencies gained, with Hungary's forint and Romania's leu rebounding after hitting new record lows against the euro this week. The Czech crown pushed higher after a slight upward revision in third-quarter growth data indicated the region was still holding up despite a slowdown in western markets. Poland's Supreme Court ruled on Thursday in a case brought by a bank against one of thousands of Poles who took out Swiss franc-denominated mortgages that have become prohibitively expensive to service after the franc soared in value. Overturning an Appeals Court verdict after an Oct. 3 ruling by the European Union's top court, it said it could be possible to convert the loan into zloty while keeping the original interest rate, an outcome seen as unfavourable for lenders. The zloty was down 0.1% on the day at 4.326 per euro at 1046 GMT, after having touched 4.3247 on Thursday after the verdict. "The Supreme Court's judgment reminded investors of the problem of foreign exchange mortgages at a rather unfortunate time -- after breaking 4.30," ING analysts said in a note. "With low pre-Christmas volatility, this raises the risk of the pair reaching another resistance at 4.35 even next week." The Hungarian forint rebounded after hitting a record low against the euro on Thursday, gaining 0.6% to 333.90 per euro. Thin trading on the long Thanksgiving weekend meant lower volumes were having an outsized effect, a Budapest-based dealer said, adding: "People are out buying LED TV's, they don't buy FX right now." The Czech crown firmed 0.1% to 25.542 to the euro while the Romanian leu strengthened 0.3% to 4.7785. Czech economic growth slowed somewhat in the third quarter, revised data showed on Friday, although analysts said it was still holding up well despite the slowdown in external markets like Germany. Analysts expected the data would keep the central bank in wait-and-see mode, even as it is among the few European monetary bodies still debating whether a rate hike is still needed to get ahead of domestic inflationary pressures. Governor Jiri Rusnok said in an interview with news website Aktualne.cz published on Friday that there was high likelihood of rate stability ahead. "Today's data are an argument against raising interest rates," Komercni Banka senior economist Michale Brozka said. The region's growth leaders Hungary and Poland published third-quarter gross domestic product data that was matched first estimates. "As the data is in line with the Polish Monetary Policy Council's (MPC) expectations and inflation remains in the NBP's target range, they will not affect the MPC's interest rate decisions in the coming months," Bank Pocztowy Chief Economist Monika Kurtek said in a note. Stock markets were down, hit by fears that Chinese retaliation against a U.S. law backing Hong Kong protesters could threaten to derail negotiations on a trade truce between the two countries. Prague's PX index was down 0.30% while Budapest's main index fell 0.29%. CEE SNAPSHO AT MARKETS T 1146 CET CURRENC IES Latest Previou Daily Change s bid close change in 2019 EURCZK Czech <EURCZK 25.5420 25.5715 +0.12% +0.65% = crown => EURHUF Hungary <EURHUF 333.900 336.025 +0.64% -3.84% = forint => 0 0 EURPLN Polish <EURPLN 4.3260 4.3216 -0.10% -0.84% = zloty => EURRON Romanian <EURRON 4.7785 4.7925 +0.29% -2.61% = leu => EURHRK Croatian <EURHRK 7.4355 7.4373 +0.02% -0.34% = kuna => EURRSD Serbian <EURRSD 117.500 117.610 +0.09% +0.68% = dinar => 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2019 .PX Prague 1081.16 1083.82 -0.25% +9.59% 00 .BUX Budapest 43652.1 43799.8 -0.34% +11.53 4 5 % .WIG20 Warsaw <.WIG20 2168.09 2169.09 -0.05% -4.77% > .BETI Buchares 9871.16 9869.45 +0.02% +33.69 t % .SBITO Ljubljan <.SBITO 894.16 895.10 -0.11% +11.18 P a P> % .CRBEX Zagreb <.CRBEX 1993.02 1994.64 -0.08% +13.96 > % .BELEX Belgrade <.BELEX 774.15 771.55 +0.34% +1.64% 15 15> .SOFIX Sofia <.SOFIX 543.76 543.36 +0.07% -8.53% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 1.4450 0.0510 +208bp +5bps RR RR> s CZ5YT= 5-year <CZ5YT= 1.2920 0.0680 +190bp +7bps RR RR> s CZ10YT <CZ10YT 1.4590 -0.0180 +183bp -2bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 1.3730 -0.0220 +201bp -3bps RR RR> s PL5YT= 5-year <PL5YT= 1.7220 -0.0230 +233bp -2bps RR RR> s PL10YT <PL10YT 1.9680 -0.0260 +234bp -2bps =RR 10-year =RR> s FORWARD RATE AGREEME NT 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 2.23 2.23 2.16 2.18 Rep ><PRIBO R=> Hungary <HUFFRA 0.24 0.25 0.28 0.17 ><BUBOR => Poland <PLNFRA 1.72 1.68 1.64 1.71 ><WIBOR => Note: are for ask FRA prices quotes ******************************************** ****************** (Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague and Marton Dunai in Budapest; Editing by Catherine Evans)