* Zloty lower as some see slower monetary tightening
* Forint steady through Hungary PM speech
* GDP, CPI data closely watched this week
(Updates with Polish cbanker, adds bonds)
By Marton Dunai and Jason Hovet
BUDAPEST/PRAGUE, Feb 14 (Reuters) - Central European
currencies were mostly lower on Monday, hit by a drop in the
euro, while Hungary's prime minister disappointed markets by
pushing back a rollout date for fiscal reforms.
The forint <EURHUF=> was down by 0.4 percent but little
changed after Viktor Orban told parliament his government would
present a three-year budget deficit-cutting programme by March
15, unveiling few details of the package. []
Investors had expected an announcement by the end of
February or early next month. The currency has rallied this year
on expectations the plan would put the budget on a sustainable
path following short-term measures for this year and next.
By 1551 GMT, the zloty <EURPLN=> had also shed 0.8 percent.
It has suffered from growing doubts over the extent of rises in
interest rates priced in by markets.
The Czech crown <EURCZK=> lost 0.3 percent, while the
Romanian leu <EURRON=> gained 0.2 percent.
Analysts expect up to four quarter point rises in Polish
rates this year but comments by policymakers over the past week
have suggested those expectations are overdone.
"We continue to believe that too much monetary tightening is
now discounted and see this as the key risk for PLN, given its
high sensitivity to short term interest rates," RBC said.
The latest Monetary Policy Council member to comment,
Elzbieta Chojna-Duch, added little to the debate, saying only
that policy tightening at the next meeting in March was not
"absolutely necessary". []
Most players had already doubted the bank would move again
then.
Fellow rate setter Anna Zielinska-Glebocka, however, told a
Thomson Reuters Economic Spot panel that the MPC was in a race
against time to ensure inflation stays under control and must
raise rates. []
Inflation and growth are seen as key for the likely rate
path in Poland. A Reuters poll had Poland's January inflation
accelerating to a one-year high of 3.4 percent. []
Polish bond yields inched down in what dealers said was a
correction from the rise seen in the last two weeks.
FORINT WAITING ON CHANGE
Hungary's ruling Fidesz party has said the impending changes
to the central bank's Monetary Council, and new rules that could
let Fidesz pack the council with its candidates, will not lead
to a sudden policy reversal.
But ministers have criticised the bank's tightening of
monetary policy to date and called for extraordinary steps to
support economic growth, leading markets to expect the changes
might lead to softer policy. [] []
Analysts also await the 600-700 billion forint deficit
reduction package for signs of whether Orban will return Hungary
to budget sustainability after a string of one-off measures
meant to boost growth and raise state revenues.
"The only new thing we heard in the speech was a new date
(March 15)," one Budapest-based currency dealer said. "I don't
know how many people had expected news ... Slight forint
weakening is possible now; the next technical level is 273.50."
The forint is up 2 percent this year.
Bond yields were lower on the day, with the 10-year down 5
basis points, tracking core markets mostly.
This week will also bring a heavy schedule of data releases
in the region. Poland and Hungary release January inflation
figures on Tuesday, and Hungary, the Czech Republic and Romania
give fourth-quarter GDP estimates. []
Inflation in Romania eased in January and is widely expected
to fall this year. Analysts see the central bank cutting rates
further from a record low 6.25 percent, although pressures from
surging global food prices could limit the room to do so.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.278 24.21 -0.28% +2.97%
Polish zloty <EURPLN=> 3.947 3.917 -0.76% +0.28%
Hungarian forint <EURHUF=> 272.2 271.2 -0.37% +2.12%
Croatian kuna <EURHRK=> 7.407 7.409 +0.03% -0.36%
Romanian leu <EURRON=> 4.246 4.254 +0.19% -0.31%
Serbian dinar <EURRSD=> 103.31 103.38 +0.07% +2.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +15 basis points to 40bps over bmk*
7-yr T-bond CZ7YT=RR +24 basis points to +83bps over bmk*
10-yr T-bond CZ9YT=RR +8 basis points to +80bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +358bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +331bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +296bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +526bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +478bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +421bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1652 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai/Jason
Hovet; Editing by Catherine Evans, John Stonestreet)
