* FX inch higher; officials talk down zloty
* Crown, leu shrug off data, investors focus on Greece
* Investors in wait-and-see mode ahead of Hungary's election
(adds fixed income, detail on Hungary's election)
By Marius Zaharia
BUCHAREST, April 9 (Reuters) - Central European currencies
edged up on Friday, despite renewed verbal action against the
zloty in Poland, while eyes remained on Greece's debt problems
and on Hungary's parliamentary election.
Hungarians will vote on Sunday in a first round of an
election that looks set to bring a landslide victory for the
opposition centre-right Fidesz party, giving it a strong mandate
for reforms [].
Fidesz, which campaigned on tax cuts and job creation, could
even secure a two-thirds majority, which would empower the party
to pass broader structural reforms.
"The market is in a wait-and-see mode," one trader in
Bucharest said. "Indications for a chance of a two-thirds
majority (for opposition party Fidesz) on Sunday could reassure
markets and be mildly forint positive."
At 0955 GMT, the forint <EURHUF=> was 0.1 percent stronger
from the previous close, while the zloty <EURPLN=> and the Czech
crown <EURCZK=> were also 0.1-0.2 percent up. Romania's leu
<EURRON=> was 0.3 percent down to six-week lows, continuing its
slide after poor industry figures on Thursday [].
Hungarian bonds were steady, in line with peers, and
analysts say their bull run may continue after the election as
an expected strong majority government, a supply squeeze and
hopes for more rate cuts bode well [].
VERBAL ACTION
Official concerns have grown in recent weeks that a strong
zloty could harm the Polish economy, the only one in the
European Union that did not face recession last year. The unit
outperformed peers, having gained 7 percent since end-2009.
Deputy Finance Minister Dominik Radziwill said on Friday the
pace of zloty strengthening was worrisome, while deputy central
bank governor Witold Kozinski said the unit will not firm to 3.6
per euro. [] []
Late on Thursday, central banker Anna Zielinska-Glebocka
said that if the zloty appreciating trend proved long-term then
the panel may start considering interventions. []
"Officials' comments have not affected the market so far as
the last intervention took place in mid-90s and the vast
majority of the market thinks they will end up with verbal
interventions only," one trader in Warsaw said.
"The risk of interventions may appear if the zloty firms to
around 3.60, it is a mid-year target and it is at hand."
Regional currencies have been largely resilient to Greek
woes so far this year, as some of the euro outflows entered
central Europe, but episodes of high volatility have occurred
sporadically.
One such episode happened on Thursday, when currencies and
stocks were knocked off recent multi-month highs.
Although currencies edged higher on Friday in a minor
correction from Thursday's losses, market participants were
still focusing chiefly on the news flow out of Greece.
"Greece is what seems to dominate markets at the moment,"
said Vlad Muscalu, economist at ING Bank in Bucharest.
That is one of the reasons currencies failed to react to
data showing Czech industry expanded by 7 percent on the year in
February, while inflation rose by 0.3 percent on the month in
March. []
In Romania, data showed the trade deficit shrank by 34
percent on the year in January-February, signalling the economy
was still adjusting, which leaves room for the central bank to
cut interest rates further.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.133 25.193 +0.24% +4.71%
Polish zloty <EURPLN=> 3.843 3.846 +0.08% +6.79%
Hungarian forint <EURHUF=> 266.8 267.18 +0.14% +1.33%
Croatian kuna <EURHRK=> 7.259 7.27 +0.15% +0.69%
Romanian leu <EURRON=> 4.128 4.116 -0.29% +2.65%
Serbian dinar <EURRSD=> 99.658 99.64 -0.02% -3.79%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -6 basis points to 68bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +87bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +79bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +361bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +305bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +251bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +467bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +405bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +372bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1255 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 bureaux, writing by Marius Zaharia;
Editing by Ron Askew)
