* Fx mixed, forint gains, new rate setters to be appointed
* Hungary may issue dollar bond next week
* Czech central bank seen keeping rates on hold
(Adds Hungary minutes, comments, prices)
By Luiza Ilie and Sandor Peto
BUCHAREST, March 18 (Reuters) - The forint firmed on Friday
as investors await the appointment of new Hungarian central bank
(NBH) rate setters, while other currencies in the region were
mixed.
The minutes of the NBH's last rate meeting underpinned
expectations that the bank would not cut rates for months, while
analysts do not expect the Czech central bank to raise its
interest rates at its meeting next week.
In the region only Romania's leu escaped falls this week as
global markets worried about Japan's struggle to keep a nuclear
crisis under control after an earthquake last week.
The region's most liquid unit, the zloty <EURPLN=> has shed
about one percent versus the euro over the week, the Czech crown
<EURCZK=> 0.6 percent and the forint <EURHUF=> 0.3 percent.
On Friday the zloty firmed 0.1 percent to 4.059, the forint
0.4 percent to 272.50, while the leu was flat at 4.168 and the
crown weakened 0.1 percent to 24.381.
A Warsaw-based currency dealer said the zloty was among
currencies that gained from some easing of risk aversion after
Libya's government said it would halt military action in the
oil-producing country, Japan took further efforts to prevent a
radiation disaster and G7 intervention broke the yen's rise.
Poland's central bank could consider raising interest rates
if the zloty weakens further, a deputy governor said, but
another rate setter played down the chances of a rise next
month.[]
CENTRAL BANKS WATCHED
While international developments including news about the
euro zone debt crisis will continue to influence appetite for
the assets of Central European emerging markets, investors also
weigh interest rate trends versus risks in the region.
Hungary's parliament is expected to appoint one or two
central bank (NBH) rate setters on Monday.
The minutes of the bank's last rate meeting showed that the
members staying in its Monetary Council through its current
revamp wanted to keep rates on hold last month after rate
increases since November.
"Many people say that interest rates will now stay at 6
percent all this year and I tend to agree," one Budapest-based
currency dealer said.
"It is also a question whether the (expected Hungarian)
dollar bond issue can bolster sentiment," the dealer added. "If
it does, that can give momentum to the forint's strengthening
and may also drive government bond yields lower."
The international road show of a possible dollar bond issue
is expected to end on Wednesday, Thomson Reuters service IFR
said. []
Foreign investors bought Hungarian forint-denominated bonds
this week despite the global markets jitters. Yields dropped by
2-7 basis points on Friday, with 10-year bond yields trading at
7.37 percent, lower by 4 basis points from Thursday.
Stocks in the region continued to recover from falls after
Japan's earthquake, with the main equity indices rising 0.4-0.6
percent but for Romania's <> which fell 2.1 percent.
Czech markets were looking ahead to a central bank rate
meeting next week where 19 of 20 analysts in a Reuters poll
forecast no change to record low interest rates. []
Markets have mostly priced out the chance of a rate hike but
some were surprised by a 20 basis point jump in the yield at a
13-week treasury bill auction that had drawn weak demand. Some
dealers said this could raise chances of a hike. []
Prime Minister Petr Necas said on Friday that the government
will cut its 2011 budget more than planned despite a fall in its
popularity. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.381 24.358 -0.09% +2.54%
Polish zloty <EURPLN=> 4.059 4.063 +0.1% -2.49%
Hungarian forint <EURHUF=> 272.5 273.6 +0.4% +2.01%
Croatian kuna <EURHRK=> 7.378 7.36 -0.24% +0.03%
Romanian leu <EURRON=> 4.168 4.168 0% +1.56%
Serbian dinar <EURRSD=> 103.24 102.84 -0.39% +2.6%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 13bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +69bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +72bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +338bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +309bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +491bps over bmk*
5-yr T-bond HU5YT=RR -12 basis points to +475bps over bmk*
10-yr T-bond HU10YT=RR -7 basis points to +419bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1641 CET.
Currency percent change calculated from the daily domestic
close at 1700 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 Luiza Ilie/Sandor
Peto; Editing by John Stonestreet/Ruth Pitchford)
