* Zloty unmoved by Polish GDP data, rate talk weighs on unit
* Market overprices scale of Polish tightening, dealers say
* Hungary's reforms seen sufficient to keep deficit in check
(Updates throughout)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Jan 28 (Reuters) - The Polish zloty shrugged off strong GDP
data on Friday as investors digested recent comments by monetary policymakers
suggesting interest rates may not rise as quickly as previously anticipated.
The Polish economy accelerated to 3.8 percent on an annual basis last year,
in line with market expectations and up from 1.7 percent reported in 2009. The
data, however, failed to push the currency to higher levels. []
A member of the 10-strong Monetary Policy Council, Elzbieta Chojna-Duch,
said immediately after the data release that the reading was neutral for
interest rates and there was no reason to decide on strong monetary tightening.
"It looks like the market has finally realised that it had previously
overpriced the scale of monetary policy tightening in Poland," said Jakub
Wiraszka, dealer at BRE bank in Warsaw.
Analysts polled by Reuters expect the 10-strong MPC to raise rates to 4.25
percent by the end of 2011, but Polish 12x15 forward rate agreements <PLNFRA>,
which project where rates will be in 12 months, are pricing in five interest
rates increases of 25 basis points apiece during this time.
The main rate currently stands at 3.75 percent after the central bank
tightened policy by 25 basis points last week.
By 1434 GMT the zloty <EURPLN=> was some 0.7 percent weaker against the
euro. Hungary's forint <EURHUF=> and the Czech crown <EURCZK=> were also in the
red, falling some 0.2 percent and 0.4 percent respectively.
Only Romania's leu <EURRON=> bucked the regional trend, rising some 0.2
percent.
The forint has jumped this week after successful bond tenders and growing
optimism about fiscal reforms promised by the government that are to be unveiled
in the coming weeks.
But it fell into negative territory on Friday and dealers attributed the
move to investors' profit-taking.
HUNGARY ON GOOD TRACK
Hungary's economy minister Gyorgy Matolcsy gave a boost to the forint on
Thursday when he said the government was preparing "very serious" reforms aimed
at fundamentally improving the sustainability of the state budget by 2013-2014.
[]
Analysts say this programme may be sufficient to keep Hungary's deficit
below 3 percent of GDP after temporary crisis taxes end in 2012. []
On Thursday, RBC Capital Markets recommended buying the Polish zloty against
the Hungarian forint <PLNHUF=R>, saying interest rate tightening by Hungary's
central bank had probably ended and that there were risks the reform package
would disappoint. []
Hungarian bond yields were mixed on Friday, falling at the short-end of the
curve and rising on the long-end, while Polish bonds were mostly down. Dealers
said global factors were driving the Polish debt market right now.
"What we see now is a selloff of Polish papers, particularly by foreign
investors," said one Warsaw-based fixed income dealer.
"The market has became more cautious now about global inflation concerns
which had so far been widely neglected."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.256 24.152 -0.43% +3.07%
Polish zloty <EURPLN=> 3.928 3.9 -0.71% +0.76%
Hungarian forint <EURHUF=> 271.95 271.37 -0.21% +2.22%
Croatian kuna <EURHRK=> 7.423 7.41 -0.18% -0.58%
Romanian leu <EURRON=> 4.256 4.263 +0.16% -0.54%
Serbian dinar <EURRSD=> 104.48 104.18 -0.29% +1.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -13 basis points to 33bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +67bps over bmk*
10-yr T-bond CZ9YT=RR 0 basis points to +84bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +357bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +313bps over bmk*
The P
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +510bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +456bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +400bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1534 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 bureaus, writing by Jason Hovet, editing by Catherine
Evans)
