* FX slightly up after Friday's strong GDP data
* Romania expected to sell less than planned at Tbill tender
By Marius Zaharia
BUCHAREST, Aug 16 (Reuters) - Central European currencies
posted mild gains early on Monday as forecast-beating GDP
readings late last week were offset by weaker risk appetite due
to worries over the recovery of some major economies.
Data showed on Friday showed the region's economies
performed better than expected in the second quarter, but a much
weaker than expected growth figure for Japan weakened investors'
appetite for assets in riskier emerging markets.
Fears also linger over the growth-limiting impact of
spending cuts and frail domestic demand, especially in Hungary
and Romania [].
"The risk sentiment improved somewhat on the back of strong
Q2 GDP numbers out of Germany and fairly favourable Q2 GDP
figures in some CEE countries," Danske Bank said in a note.
"Going into this week, our EMEA FX Scorecard has turned
significantly more negative as the global score plummets.
Therefore, we could be heading for higher risk aversion and
another sell-off in the EMEA FX markets."
The leu <EURRON=> and Hungary's forint <EURHUF=> gained 0.1
percent by 0749 GMT, while Poland's zloty <EURPLN=> rose 0.3
percent and the Czech crown <EURCZK=> was flat.
Investors fear a significant VAT hike and a deep cut in
public wages will deepen an expected contraction in Romania this
year and backfire by hitting state revenues.
This could endanger the country's deal with by the
International Monetary Fund and other lenders, and investors
have responded by demanding higher premiums at debt auctions
than the finance ministry is willing to accept.
Romania tenders 800 million lei of 273-day treasury bills
later on Monday, but analysts say there is little chance that
the ministry will sell as much as planned if it sticks to its
self-imposed yield cap of 7 percent.
"I expect them to sell half of it in the most fortunate
scenario," one dealer in Bucharest said, adding it was hard to
tell the yield the market could demand as the instrument was
hardly traded on Romania's dormant secondary market.
Room to price Romania's policy risks in currency markets is
limited given investors' fear of central bank intervention.
With few other domestic developments expected on Monday,
currencies were seen trading on global sentiment.
Czech July PPI was a touch below forecast, which analysts
said was neutral for the crown and underscored the case for
keeping interest rates unchanged at record lows at least until
the middle of the next year. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.816 24.813 -0.01% +6.05%
Polish zloty <EURPLN=> 3.992 4.005 +0.33% +2.81%
Hungarian forint <EURHUF=> 280.39 280.7 +0.11% -3.58%
Croatian kuna <EURHRK=> 7.229 7.232 +0.04% +1.11%
Romanian leu <EURRON=> 4.228 4.233 +0.12% +0.22%
Serbian dinar <EURRSD=> 104.52 104.85 +0.32% -8.27%
All data taken from Reuters at 0949 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
editing by Patrick Graham)
