* CEE FX off previous gains as euro fell
* Leu bucks falling trend after govt survives vote
* No need to intervene on the FX market, Polish cbanker says
(Adds fixed income, background)
WARSAW, June 16 (Reuters) - The Romanian leu held gains on
Wednesday after parliament rejected a no-confidence vote that
would have sidetracked the country's IMF aid package, while
other currencies trimmed their previous gains as the euro lost
momentum after its recent rally.
The Romanian government's survival of the vote gave it a
mandate to cut public spending as required under the IMF deal,
but a tight margin of victory raised concerns over the
coalition's ability to push beyond the austerity plan.
[]
"The failure of the no-confidence vote should provide some
relief to investors, at least until September," analysts at
Citibank wrote in a note.
"The narrow margin of the victory, however, paints a
challenging picture in terms of the government's ability to
press ahead with the reform agenda under the umbrella
of the IMF programme."
Romania followed Hungary's lead during the financial crisis
by securing a 20 billion euro International Monetary
Fund/European Union lifeline to alleviate funding worries.
By 0928 GMT the leu <EURRON=> was almost unchanged against
the euro.
Hungary's forint <EURHUF=> fell 0.4 percent and the Czech
crown <EURCZK=> was 0.2 lower as the euro - the region's main
reference currency - fell against the dollar after it had
briefly touched 2-week highs earlier in the day.
Czech current account data showed a surprise 12.4 billion
crown surplus in April, but the data had little impact on the
currency. []
Stock markets rose 0.3 percent to 2.9 percent, led by
Bucharest <>.
NO FX INTERVENTIONS?
Polish central bank Monetary Policy Council (MPC) member
Jerzy Hausner said on Wednesday Poland does not need
interventions on the forex market, but the exchange rate is key
for monetary policy. []
His comments fit the view of newly appointed bank Governor
Marek Belka who said earlier in June it should not be anyone's
role to suggest that any particular zloty exchange rate is being
targeted.
The Polish currency <EURPLN=> has swung back and forth in
recent months. It has gained almost 3 percent since June 4, when
it touched its key psychological level of 4.2 against the euro.
It was trading at 4.072 to the euro, 0.4 percent weaker
since Tuesday's close.
In April the central bank intervened to counter zloty
strength, while there were reports in May that the finance
ministry had sold euros on the market in a move to curb a sharp
depreciation of the unit.
Polish bonds were relatively stable ahead of 10-year bonds
auction, while Hungary's papers eased, with bond yields rising
some 5 basis points and the Czech bonds were a touch stronger
before a benchmark 2024 bond auction.
The Czech finance ministry has sold more than it planned in
the last five auctions and is starting to issue more to meet
record borrowing this year.
"Risks are almost 100 percent that MoF would sell higher
amount should the demand and prices be close to market,"
Komercni Banka dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25,682 25,633 -0.19% +2.48%
Polish zloty <EURPLN=> 4,072 4,057 -0.37% +0.79%
Hungarian forint <EURHUF=> 279,65 278,64 -0.36% -3.33%
Croatian kuna <EURHRK=> 7,21 7,211 +0.01% +1.38%
Romanian leu <EURRON=> 4,222 4,223 +0.02% +0.36%
Serbian dinar <EURRSD=> 103,45 103,063 -0.37% -7.32%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 158bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +166bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +157bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +411bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +372bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +306bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +633bps over bmk*
5-yr T-bond HU5YT=RR +8 basis points to +584bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +488bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1128 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz; editing by Stephen Nisbet)
