* Leu gains as parlt approves budget crucial for aid deal
* Yields stable, pressure seen on 10-yr Polish bonds
* This year's risk-driven rally seen fragile
(Recasts with leu move)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Jan 15 (Reuters) - The Romanian leu hit
a one-year high on Friday, stirred up by hopes that billions of
euros in IMF cash will arrive next month and outperforming other
central European markets buoyed by improved risk appetite.
Romania approved an austerity budget for 2010 late on
Thursday, the main condition to get a further 3.3 billion euros
of aid from the European Commission and International Monetary
Fund. The IMF said on Friday it would release the funds if a
one-week review on Jan. 20 proved positive. [].
Many believe that now looks close to a done deal after the
unlocking of months of political stalemate that prevented
Bucharest taking steps to meet the Fund's terms.
At 1503 GMT, the leu <EURRON=> was up 0.7 percent, the
Polish zloty <EURPLN=> and the Czech crown <EURCZK=> were
0.2-0.3 percent stronger, while the Hungarian forint <EURHUF=>
was down 0.2 percent.
"The possibility that Romania gets both the third and the
fourth tranches at once is prompting investors to increase
exposure on the leu," one dealer said.
The third tranche is worth 1.5 billion euros, the fourth is
worth 800 million and the rest would be disbursed by the
European Commission.
The crown and the zloty gave back some of the gains caused
by breaking key technical levels in the morning, as the dollar
strengthened on U.S. consumer prices data [] and
JPMorgan earnings [].
Risk appetite that bolstered regional markets this year
remains fragile, as shown by a poor Czech bond auction earlier
this week []. Hungarian central banker Ferenc
Karvalits also underlined such nerves [].
BUMPS
There are doubts over the region -- particularly around
fiscal policy and the broader risk environment. Analysts also
expect a bumpy outlook in main trading partner Germany to bode
ill for the region's recovery later in 2010. [].
Both Polish and Czech data showed current account shortfalls
late last year, mainly due to dividend payouts. In Poland a
special payout by state-owned insurer PZU previously hit the
zloty. [].
In Romania, though, the external deficit shrank almost 70
percent in January-November and analysts expect the gap, once
the country's main economic headache, to remain on track for
ending 2009 at a more sustainable 4.5 percent of GDP.
The need to keep the current account under control is the
main reason dealers expect the leu to have trouble firming
beyond 4.0 per euro this year, as the central bank is seen
favouring a weak currency to boost exports.
Regional debt markets were generally quiet, with only
short-term Hungarian yields dropping some 15 basis points after
Karvalits' comments that fragile risk appetite will play an
important part in rate decisions.
The spread between three- and 10-year yields widened to more
than 60 basis points from below 50 on Thursday, indicating lower
demand for long-term bonds.
Polish markets were eyeing a 10-year tender next Wednesday.
"I think we may still see some pressure on 10-year bonds,"
said Henryk Sulek of Bank Millennium. "Investors are selling the
papers hoping to buy them again but cheaper at a tender."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.915 25.979 +0.25% +1.56%
Polish zloty <EURPLN=> 4.042 4.049 +0.17% +1.53%
Hungarian forint <EURHUF=> 267.19 266.72 -0.18% +1.18%
Croatian kuna <EURHRK=> 7.281 7.278 -0.04% +0.39%
Romanian leu <EURRON=> 4.101 4.128 +0.66% +3.33%
Serbian dinar <EURRSD=> 96.56 97.02 +0.48% -0.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +17 basis points to 91bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +113bps over bmk*
10-yr T-bond CZ10YT=RR +3 basis points to +119bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +328bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -12 basis points to +532bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +499bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +435bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1703 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai and
Marius Zaharia; Editing by Patrick Graham)
