* Leu falls after c.banker comments on currency's strength
* Zloty holds on to gains after rates left unchanged
* Polish bonds stronger after supply details
* Romania to reopen 10-year bond
(Updates with details, Romania debt supply)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, March 31 (Reuters) - Romania's leu hit a
3-week low on Wednesday after a central banker moved to talk the
currency down, while the Polish zloty looked set to hold on to
its biggest quarterly gain in a year after the central bank left
rates unchanged.
Romania's deputy Governor Cristian Popa was quoted as saying
on Wednesday fundamentals did not justify a further firming of
the leu, a day after he said the central bank's vote to cut
rates by 50 basis points on Monday was unanimous.
[]
Markets interpreted the comments as a sign the central bank
was unwilling to tolerate stronger levels and sent the leu
<EURRON=> 0.6 percent down on the day to its lowest levels in
three weeks, close to 4.1 per euro.
"It's verbal intervention," one trader in Bucharest said.
"There is pressure (from the belief) that it might be followed
by actual intervention."
Romania's central bank does not publish the minutes of its
meetings or a breakdown of voting on rate decisions.
Weak inflation and strong currencies guided Romania and
Hungary to 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.
In Poland, the central bank left rates unchanged at a record
low of 3.5 percent as expected [] without hurting
the zloty <EURPLN=>, which was up 0.3 percent on the day.
But market participants were left short of clues on whether
the bank will delay policy tightening due to weak growth and a
strong currency, as the Monetary Policy Council said it saw
equal chances inflation will run below or above the target in
the medium term [].
The Polish unit will have around 6.2 percent in the first
quarter, its biggest quarterly gain since an emerging market
rally started in the second quarter of last year, when central
European markets jumped from a bottom.
The Czech crown <EURCZK=> was a tough stronger, while the
Hungarian forint <EURHUF=> traded 0.4 percent up at 1355 GMT,
unfazed by current account figures that showed the first annual
surplus in at least 14 years in 2009. []
DEBT PLANS
Polish bond yields fell 2-7 basis points across the curve
after the release of April debt supply [], but were
unchanged after the rate decision.
Romania also posted its debt plans for April, with the
highlight being the reopening of a benchmark 10-year bond for
the first time since 2008 [].
Investors have snapped up regional debt this year, betting
on low rates and in a bid to reduce exposure in some parts of
the euro zone, which are seen having a worse fiscal profile than
central Europe.
Romanian debt yields have fallen by more than 300 basis
points from 10 percent in December, reaching close to the
central bank's recently lowered 6.5 percent key rate.
Hungarian bonds were steady on Wednesday, 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.
But the debt rally could reverse once easing cycles come to
an end and inflation risks reappear.
Hungarian and Czech elections this spring will also weigh
until new governments are formed and markets assess their
strength and policies.
"Elections will come, we will have a new government, we will
see new budget figures. I also expect the forint to weaken based
on charts," one dealer in Budapest said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.413 25.439 +0.1% +3.56%
Polish zloty <EURPLN=> 3.862 3.874 +0.31% +6.27%
Hungarian forint <EURHUF=> 265.61 266.62 +0.38% +1.78%
Croatian kuna <EURHRK=> 7.263 7.26 -0.04% +0.64%
Romanian leu <EURRON=> 4.095 4.072 -0.56% +3.48%
Serbian dinar <EURRSD=> 99.61 99.763 +0.15% -3.74%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +8 basis points to 69bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +104bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +94bps 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*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +471bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +409bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +383bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1655 CET.
Currency percent change calculated from the daily domestic
close at 1600 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 Jason Hovet/Marius
Zaharia; Editing by John Stonestreet)
