* Zloty down a touch, cbank chief says is stabilising
* Stocks drop with western peers
* Focus on Greece, fundamentals; CDS at new lows
(Adds bonds, updates prices)
By Jason Hovet
PRAGUE, March 15 (Reuters) - The Polish zloty eased with
other central European currencies on Monday, showing some signs
of stabilisation after policymakers expressed concern on its
rise to 15-month peaks last week.
The zloty has led a jump in emerging EU currencies this year
as investors position in the region's assets due to better
growth prospects than some western peers and worries about the
debt burdens of countries on the euro zone periphery.
But the surge prompted concern among policymakers that
stronger currencies could hit export demand and recovery.
Polish central bank Slawomir Skrzypek said on Saturday the
zloty is beginning to stabilise, following up comments last week
that the fundamentals did not justify the state of currency
markets. []
The zloty <EURPLN=> eased 0.3 percent to bid at 3.896 to the
euro by 0938 GMT, around 1 percent off its high last week. But
analysts said it could again test stronger levels.
"I believe that this week we will test 3.85 against the
euro," said Lukasz Wojtkowiak, fx analyst at Millennium Bank.
"The dollar index fell out of its appreciation trend which
should further support a weaker dollar and stronger zloty."
The zloty is up 5.3 percent since Jan. 1, while the Czech
crown and Romanian leu have kept pace with 3.2 percent and 3.8
percent rises, respectively.
On Monday, the crown <EURCZK=> dipped 0.1 percent to 25.512
per euro and the leu <EURRON=> held steady around 4.08.
Hungary's forint <EURHUF=> was also steady with markets closed
for a holiday.
Stock markets tracked peers lower, with Warsaw <>
falling 1 percent.
INFLATION OUTLOOK
Eyes were on a meeting of euro zone finance ministers in
Brussels, with possible financial aid for heavily-indebted
Greece on the agenda. []
Central Europe is less indebted overall than the EU average,
which analysts say has put the region in a better position.
Credit default swaps (CDS) have dropped to 1-1/2 year lows in
Hungary and Poland this month, according to Reuters data.
Polish inflation was due to be released at 1300 GMT, which
could cool expectations for rate hikes in the second half of the
year. Analysts expect last months' inflation to have slowed to a
13-month low of 3.0 percent, but still above the central bank's
2.5 percent target. []
Commerzbank said a higher-than-expected reading, though,
would disappoint the Monetary Policy Council (MPC>.
"Now that the new MPC had formed and seems to favour a more
restrictive monetary policy than its predecessor, this points
towards more rapid rate rises," its analysts said in a note.
"This would doubtless constitute a positive environment for
the zloty."
Polish bond yields dipped a few basis points ahead of the
data.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.512 25.474 -0.15% +3.16%
Polish zloty <EURPLN=> 3.896 3.883 -0.33% +5.34%
Hungarian forint <EURHUF=> 265.5 265.49 0% +1.83%
Croatian kuna <EURHRK=> 7.263 7.261 -0.03% +0.64%
Romanian leu <EURRON=> 4.084 4.082 -0.05% +3.76%
Serbian dinar <EURRSD=> 99.84 99.72 -0.12% -3.97%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +7 basis points to 83bps over bmk*
7-yr T-bond CZ7YT=RR +2 basis points to +117bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +103bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +385bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +310bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +262bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1040 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Patrick Graham/Ruth Pitchford)
