* Leu falls on c.banker comments, zloty holds after c.bank
* Polish markets await clues on likely tightening this year
* Polish bonds stronger after supply details
(Updates with Polish cbank, debt supply)
By Jason Hovet
PRAGUE, March 31 (Reuters) - Romania's leu hit a 1-1/2 week
low on Wednesday after a central banker said fundamentals did
not justify further appreciation, while the Polish zloty held
gains when the central bank left interest rates unchanged.
Markets had widely expected Polish policymakers to hold
interest rates at a record low 3.5 percent, but are watching
Wednesday's statement and news conference for signs they may
delay tightening policy more than previously thought.
Weak inflation and strong currencies helped Romania and
Hungary cut interest rates to new lows this week, while the
Czechs signalled last week that a rate cut was still an option,
pushing back market expectations of hikes later this year.
"People are pushing their forecasts (for Polish rate hikes)
back to the second half of the year given the currency
strength," Nomura economist Peter Attard Montalto said.
"Key for the press conference will be the tone, we expect a
neutral bias to remain but with a slightly dovish tone, as well
as vote distribution," he added.
The zloty <EURPLN=> rose 0.4 percent on the day to 3.86 per
euro, edging back toward a 15-month peak it touched this month
but unmoved by the rate decision. Dealers said there was room
for more gains.
The Polish bank will hold a news conference and release a
statement explaining its interest rate decision at 1300 GMT.
Earlier, bonds firmed after the release of April debt
supply, but were unchanged after the rate decision.
LOWER OR ON HOLD
Romania's central bank decided unanimously to cut rates by
50 basis points on Monday, deputy Governor Cristian Popa told
reporters on Tuesday, a rarely released detail analysts said
likely heralded further easing. []
On Wednesday he was quoted as saying that current economic
fundamentals do not justify firming of the leu. []
The leu <EURRON=> fell 0.5 percent on the day to 4.09 to the
euro by 1111 GMT, its lowest since the start of last week.
"It's verbal intervention," one trader in Bucharest said.
"There is pressure (from the belief) that it might be followed
by actual intervention."
Dealers said the central bank helped knock the leu off
14-month highs last week, and say the bank intervened last year
to check weakening. The central bank has always declined to
comment.
Elsewhere, the Czech crown <EURCZK=> and Hungarian forint
<EURHUF=> trod water. Hungarian bonds were steady with yields on
the 3-year bond around almost 5-year lows and near 2-1/2 year
lows on the 10-year. The central bank there has left space open
for more monetary easing, which could boost bonds.
The forint also hit its highest level since the turn of
2008/2009 this month, but has retreated around 2 percent since
then, while the zloty is only 0.1 percent off its high.
Strategists expect the zloty to outperform peers, which are
expected to gain on an export recovery. But analysts warn the
path will be choppy with worries persisting in markets over
Greece's and other euro zone peripheral countries' debt.
Hungarian and Czech elections this spring will also weigh
until new governments are formed and markets assess their
strength and policies.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.427 25.439 +0.05% +3.5%
Polish zloty <EURPLN=> 3.86 3.874 +0.36% +6.32%
Hungarian forint <EURHUF=> 266.11 266.62 +0.19% +1.59%
Croatian kuna <EURHRK=> 7.263 7.26 -0.04% +0.64%
Romanian leu <EURRON=> 4.091 4.072 -0.46% +3.58%
Serbian dinar <EURRSD=> 99.65 99.763 +0.11% -3.78%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +19 basis points to 81bps over bmk*
7-yr T-bond CZ7YT=RR +7 basis points to +105bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -9 basis points to +356bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +299bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +242bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1312 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 Ron Askew)
