* FX drift as focus turns to next week's rate decisions
* Polish cbank head says still in easing bias
* Bond yields tick higher
* EU leaders to bolster funds to hard-hit countries
(Releads with FX rebound)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, March 20 (Reuters) - Emerging European
currencies reversed early losses against the euro on Friday to
move higher on the day, but generally drifted ahead of a round
of central bank meetings starting next week.
The region's central bankers were meeting in Budapest, while
European leaders in Brussels agreed to double the bloc's crisis
funds for rescuing non-euro zone members, as well as to seek a
doubling of International Monetary Fund resources to help
countries hit in the downturn. []
Analysts said the moves, already well-flagged to the market,
could help boost confidence in the hard-hit central and eastern
European region where falling economic growth and financing
concerns have pushed currencies to multi-year lows.
The Polish zloty <EURPLN=> rose 0.9 percent from Thursday's
domestic close to 4.577 per euro by 1215 GMT. The Hungarian
forint <EURHUF=> was up 0.8 percent to bid at 299.02 per euro
and the Czech crown <EURCZK=> rose 0.9 percent to 26.65.
"The news about the doubling of the EU's crisis fund had a
positive impact on the region; the zloty rebounded and the
forint tracked it," one Budapest based dealer said.
A Polish dealer also said some banks had pushed the zloty
weaker ahead of a midday fixing from the central bank, likely to
lift profit from maturing options.
Currencies have lost much of their strong gains of this
month which followed rallies on stock markets. Dealers said
markets had cooled after the U.S. Federal Reserve set plans this
week to buy up government debt, flooding markets with cash.
Investors also awaited a new round of interest rate meetings
in central Europe next week. Hungarian and Czech policymakers
are seen holding rates steady due to their weak currencies,
while Poland is expected to cut 25 basis points. []
Polish central bank governor Slawomir Skrzypek said on
Friday the bank was still in an easing bias. []
FUNDS BOOST
Bond prices in the region edged lower. In Hungary, the yield
curve has almost flattened out in the past week, and the state
debt management agency is expected to continue buying back
paper.
In Romania, the leu was steady against the euro <EURRON=>,
moving in a tight range around 4.29 as markets watched
negotiations with the IMF on an aid package that was seen at
around 20 billion euros. Romania is likely to become the third
EU member to receive external help after Hungary and Latvia.
Outside the bloc, Serbia's central bank held its key policy
rate steady on Friday as it awaits the outcome of talks with the
IMF on a new 3.0 billion euro loan. [] The dinar
currency <EURRSD=> was up a touch at 94.42 to the euro.
Some confusion came late on Thursday when Polish Prime
Minister Donald Tusk said the country wanted to start talks with
the IMF on credit lines.
But Finance Minister Jacek Rostowski later said Poland needs
no IMF help and instead may lend the body $1.5 billion as part
of a larger $75-100 billion European contribution.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.655 26.89 +0.88% +0.37%
Polish zloty <EURPLN=> 4.577 4.616 +0.85% -10.09%
Hungarian forint <EURHUF=> 299.02 301.45 +0.81% -11.86%
Croatian kuna <EURHRK=> 7.46 7.441 -0.25% -1.27%
Romanian leu <EURRON=> 4.295 4.297 +0.05% -6.53%
Serbian dinar <EURRSD=> 94.42 94.64 +0.23% -5.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +20 basis points to 231bps over bmk*
4-yr T-bond CZ4YT=RR -7 basis points to +268bps over bmk*
8-yr T-bond CZ8YT=RR +26 basis points to +326bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +11 basis points to +439bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +388bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +330bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +8 basis points to +1077bps over bmk*
5-yr T-bond HU5YT=RR +20 basis points to +1018bps over bmk*
10-yr T-bond HU10YT=RR +40 basis points to +911bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1320 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)
