* Czechs hold rates, hike voted on for first time since 2008
* Poland's cbank voted on 50 bps hike -minutes
* Hungary's bonds sell well, secondary market little moved
* Forint waits on Audi press conference
(Updates throughout)
By Marton Dunai and Dagmara Leszkowicz
BUDAPEST/WARSAW, Sept 23 (Reuters) - The Czech crown
shrugged off weakness in emerging European currencies after the
country's central bank left interest rates unchanged but put a
rate hike to a vote for the first time since 2008.
Interest rates have dropped to record lows throughout
central Europe in the past two years to help economies cope with
a downturn in foreign trade.
But with a fragile economic recovery starting to gain some
traction, analysts are expecting rate rises this year or next in
Czech Republic and Poland as they rebound faster than Hungary or
Romania.
The Czechs left the main interest rate flat at a record low
0.75 percent as expected, keeping policy loose due to the
strength of the crown and the lack of other inflationary
pressures in a slowly recovering economy. []
But one member of the seven-strong bank board voted for a
hike for the first time since June 2008, the last meeting before
the Czechs embarked on a 300 basis point easing cycle that ended
in May.
The rate hike vote came earlier than many in the market had
expected despite more hawkish rhetoric in the past month from
board members, who said they either wanted to debate a hike soon
or that they were uncomfortable with rates at such a low level.
The crown <EURCZK=> was little changed after the vote and
later press conference, while interest rate swaps were unmoved.
Markets are pricing in flat rates until the middle of 2011.
"I expect rates will be stable this year, and hikes next
year... With the crown it is quite difficult to expect rate
hikes in the Czech Republic," said UniCredit fixed income dealer
Robert Weiner. "I don't think (today's vote) will influence the
market too much."
POLISH ALSO VOTE ON HIKE
Minutes from the Polish central bank's sitting in August
showed the council voted on, but declined to implement, a
surprisingly large 50 basis point rate hike.
The size of the potential hike was larger than the market
had assumed last month, when one central banker had said an
increase was discussed. []
Polish bonds weakened following the statement, and bond
yields rose 2 basis points at the shorter end of the curve.
The key interest rate stands at an all-time low of 3.5
percent in Poland and a vast majority in the market expects the
10-strong body to raise borrowing costs by 25 basis points by
the end of 2010.
In Hungary the government debt agency sold 55 billion
forints of bonds at a primary auction, 5 billion more than
planned, but traders said market reaction was limited and top-up
tender results disappointed.
The forint <EURHUF=> fell 0.6 percent, while the Polish
zloty <EURPLN=> lost some 0.4 percent to the common currency as
weak stock markets weighed on the region.
Hungarian markets were focused on a 1430 GMT news conference
with Prime Minister Viktor Orban and Audi Chairman Rupert
Stadler.
The two are expected to announce a major capacity expansion
at Audi's Hungarian car plant, potentially supporting the
forint.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.592 24.58 -0.05% +7.02%
Polish zloty <EURPLN=> 3.964 3.949 -0.38% +3.53%
Hungarian forint <EURHUF=> 280.5 278.71 -0.64% -3.62%
Croatian kuna <EURHRK=> 7.285 7.283 -0.03% +0.33%
Romanian leu <EURRON=> 4.255 4.258 +0.07% -0.41%
Serbian dinar <EURRSD=> 105.48 105.4 -0.08% -9.1%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +6 basis points to 106bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +102bps over bmk*
10-yr T-bond CZ9YT=RR +10 basis points to +112bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +8 basis points to +401bps over bmk*
5-yr T-bond PL5YT=RR +10 basis points to +380bps over bmk*
10-yr T-bond PL10YT=RR +6 basis points to +319bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +595bps over bmk*
5-yr T-bond HU5YT=RR +8 basis points to +557bps over bmk*
10-yr T-bond HU10YT=RR +6 basis points to +466bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1523 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaux, writing by Marton Dunai;
Editing by John Stonestreet)
