* Romanian PM nominee seen facing difficulties, leu stable
* Year-end volatility, Greece, strong USD to weigh on region
* Hungarian cbank seen cutting rates by 50 bps again
* Polish November output beats forecast
(Updates throughout)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Dec 17 (Reuters) - The Romanian leu was
flat as the re-elected president asked the acting prime minister
to stay on, while other central European currencies were mixed,
pressured by low risk appetite and year-end profit-taking.
Romanian President Traian Basescu nominated interim prime
minister Emil Boc to form a government, in a move that might
solve a political crisis in the short term, but could fuel
instability in the longer term. []
The prospect of a cabinet backed by a thin, shaky majority
after months of political deadlock was met with a mixed reaction
by markets, as Romania still has a lot to do to meet conditions
attached to an aid deal led by the International Monetary Fund.
The leu <EURRON=> edged down briefly after the announcement
but recouped losses to trade an inch stronger on the day at
4.211 per euro at 1432 GMT.
"It is crucial to see how much political support he will
garner," said Elisabeth Gruie of BNP Paribas. "A broad political
mandate... is crucial for the IMF deal and pushing reforms going
forward."
The IMF and the European Commission said they were
optimistic that Romania could receive its next loan tranches in
February.
PRESSURES
East Europe's currencies were under pressure as optimistic
Fed comments strengthened the dollar overnight, and seasonal
profit-taking and investor fears of a spillover from Greece
still weighed.
In the longer term, regional markets could be hurt further
by inflexible, bloated budgets across the region and looming
elections next year. []
A Reuters poll showed that most analysts expect the
Hungarian central bank (NBH) to cut its base rate again by 50
basis points to 6.5 percent on Monday. [] Some
strategists say a deeper drop in risk appetite could hurt
Hungarian markets as yields fall.
Hungary's forint <EURHUF=> fell 0.3 percent and the Polish
zloty <EURPLN=> eased 0.1 percent. Warsaw markets were little
changed by data showing industrial output rose at its fastest
pace since April 2008, beating expectations. []
The crown <EURCZK=> rose 0.4 percent, outperforming peers,
despite an unexpected 25 basis point cut in the main policy rate
on Wednesday [], as exporters took advantage of its
relative weakness, making hedging transactions, dealers said.
"Corporate clients are happy to sell the euro/crown. They
don't care that rates went down, and are taking advantage of the
higher exchange rate," a Prague based dealer said, adding
volumes were rather thick.
But after the hedging wave subsides in coming days, the
crown should weaken, dealers said. A key resistance level could
be at 26.320-350 after which it would quickly fall to 26.6.
Bond yields rose slightly regionwide, also reflected by a
government bond auction in Hungary, where yields have risen by
some 50 basis points since the last auction two weeks ago, and
the debt management agency AKK trimmed the offer in the 5-year
segment by 5 billion forints. []
In Romania, the government sold less paper than planned at
its cutoff yield of 10 percent []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.125 26.234 +0.42% +2.4%
Polish zloty <EURPLN=> 4.179 4.177 -0.05% -1.53%
Hungarian forint <EURHUF=> 277.8 276.93 -0.31% -5.13%
Croatian kuna <EURHRK=> 7.29 7.288 -0.03% +1.03%
Romanian leu <EURRON=> 4.211 4.219 +0.19% -4.67%
Serbian dinar <EURRSD=> 95.963 95.72 -0.25% -6.76%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -14 basis points to +110bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +95bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +83bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR +7 basis points to +372bps over bmk*
10-yr T-bond PL10YT=RR +7 basis points to +310bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +589bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +547bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +479bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1632 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Marton Dunai and Marius Zaharia; Editing by
...)
