* First Hungary debt auction since IMF talks breakdown
* Zloty seen hovering around 4.00/euro, crown off highs
By Jason Hovet
PRAGUE, July 29 (Reuters) - Hungary's forint fell in early
trade on Thursday, with investors nervous ahead of Budapest's
first bond sale since talks with the IMF collapsed, prompting a
series of warnings on its credit rating.
Prime Minister Viktor Orban said on Wednesday the country
could see its rating cut, adding to a string of unsettling signs
out of Hungary whose impact has been eased by improved investor
appetite for risk assets. []
More bullish growth hopes helped push Poland's zloty past
the key 4.00 per euro level while the Czech crown retreated only
slightly from a 20-month peak hit in the previous session.
Stock markets rose, following western peers up after
improving company earnings from the second quarter, and adding
support to currencies.
Dealers expected positive sentiment towards emerging market
assets will help Hungary's debt sale.
"After the (midday) auction the gauge of appetite for
Hungarian assets will be more on the mark," a Budapest dealer
said.
"Recent government comments have been mixed. Some were
positive, but others, like the prime minister's comments from
yesterday, are just asking for trouble."
The Hungarian forint <EURHUF=> dipped 0.3 percent to 283.4
to the euro by 0735 GMT. The zloty <EURPLN=> led gainers with a
0.1 percent rise along with Romania's leu <EURRON=>.
The crown <EURCZK=>, CEE's best performer this year, slipped
0.3 percent to 24.769 per euro in slight profit-taking.
BULL RUN
Strategists have become more bullish on the crown after
improving economic data at home and in trade partner Germany. A
new centre-right government has also strengthened the country's
appeal to investors by keeping to budget tightening.
"The Czech crown undoubtedly is the EMEA currency that we
are most bullish on -- both short-term and long-term," Danske
Bank said in a note.
"We believe this is fully justified given relatively strong
Czech fundamentals and optimism about Czech economic reforms."
The crown broke below the 25 per euro level for the first
time since September 2009 on Wednesday, pushing it past
technical barriers.
The 25 rate was also a level that central bank policymakers
had verbally intervened against in the past to protect export
strength, and analysts said there was still a risk they could
speak out before an Aug. 5 policy meeting expected to keep
interest rates on hold.
Hungarian assets have mostly held their ground during the
new government's standoff with the IMF -- but analysts said that
leaves plenty of scope for a bigger selloff if official
resistance to an IMF deal persists. []
Romania, another aid recipient, sold 1.2 billion euros
($1.56 billion) in one-year treasury bills on Wednesday, three
times the planned amount, with the average accepted yield
rising 65 basis points. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.769 24.694 -0.3% +6.25%
Polish zloty <EURPLN=> 3.999 4.001 +0.05% +2.63%
Hungarian forint <EURHUF=> 283.4 282.51 -0.31% -4.6%
Croatian kuna <EURHRK=> 7.243 7.243 0% +0.91%
Romanian leu <EURRON=> 4.247 4.252 +0.12% -0.23%
Serbian dinar <EURRSD=> 106.22 106.17 -0.05% -9.73%
All data taken from Reuters at 0936 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet)
