News
BG: Mixed – C/A balance brings YtD surplus to 0.7% of GDP (p2)
CZ: Mixed – April PPI accelerates to 6.4%YoY, C/A posts surplus (p2)
HR: Positive – April CPI comes in at 2.4% yoy (UCCIB 2.7%) (p2)
HU: Neutral – MPC keeps policy rate unchanged (p2)
LN: Positive – C/A 1Q2011 shows signs of sustainable development (p3)
RO: Positive – Govt auctions RON 1.1bn in 6M T-bills, yield – 6.29%, bid/cover ratio – 2.64 (p3)
RU: Negative – Russian real GDP expanded by 4.1% yoy in 1Q11 (p3)
Today’s Events
BG: April Unemployment / HU: 3mo t-bill auction / RU: April PPI / SL: March Unemployment / UA: April IndOut, April Retail Trade
EEMEA Markets
The past week has produced some interesting C/A data in the region. Last week saw Turkey post another wider than expected C/A release while Monday saw Poland follow a similar path. The C/A deficit was wider than expected at EUR 1.4bn while February’s deficit was also revised wider. YTD the deficit stands at EUR 3.5bn compared with EUR 1.1bn for the same period last year. Another month of negative errors and omissions in March – YTD errors and omissions stand at a negative EUR 2.6bn compared with EUR 3.3bn for 1Q last year. Following a weak February foreign buyers of bonds returned aggressively in March, posting inflows of EUR 1.5bn. FDI was much more muted at EUR 0.6bn, EUR 2.0bn YTD compared with EUR 3.2bn for the same period last year. The most surprising flow is a EUR 5.1bn inflow booked in other investment liabilities, which is one-off in nature. Bottom line remains a widening C/A deficit which is supported by debt creating flows. It is against this BoP backdrop that the NBP and MinFin are struggling (with little success YTD) to create an environment that is friendlier to PLN gains.
Romania’s C/A balance continues to move in the opposite direction. From EUR 44mn over the first two months of this year, the deficit for 1Q as a whole widened to EUR 634mn but this still represents a significant improvement on a deficit of EUR 1.5bn for the same period last year. As a % of full year GDP the deficit stood at 0.5% compared with 1.3% for the same period last year. We have only limited data on financing but the NBR notes inward FDI of EUR 0.4bn, covering 60% of the C/A deficit YTD. Meanwhile CZK also posted a surprise C/A surplus in March. Romania remains one of our favorite macro picks in the region currently. CZK has underperformed our expectations since the start of the month but we look for a more attractive opportunity to re-enter a short EUR/CZK position.
UniCredit Research