* Forint up ahead of rate decision, after elections
* Other FX also stronger, though trimmed their gains
* Stock indices give support
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, April 26 (Reuters) - Hungary's forint firmed on
Monday ahead of an expected interest rate cut and following the
centre-right Fidesz party's unprecedented win of a two thirds
majority in parliament, opening the way for market reforms.
Other emerging European currencies also strengthened but
trimmed some of their morning gains.
Analysts see Fidesz's victory as positive for an economy
that came close to collapse two years ago but they want to see
clear plans on how the party intends to lower taxes while
keeping the budget deficit in check. []
Hungary's central bank (NBH) is expected on Monday to cut
the main interest rate by another 25 basis points to 5.25
percent <NBHI>, a monthly Reuters poll of analysts showed.
[]
"The two-thirds (majority) can help further gains, but only
in today's session," one Budapest-based dealer said, adding that
a 25 basis point rate cut was already priced in.
By 0921 GMT the forint <EURHUF=> was 0.1 percent stronger to
the euro, trading at 263.34. Poland's zloty <EURPPLN=> gained
0.2 percent while Romania's leu <EURRON=> added 0.1 percent
Only the Czech crown <EURCZK=> bucked the firming trend,
remaining flat against the common currency, with rate cut bets
still weighing on the unit.
Stocks in the region were all in the black, with Warsaw's
WIG20 leading gains, rising some 1.9 percent.
Analysts say the zloty is likely to stay rangebound as
concerns over possible intervention on the foreign exchange
market remained.
Poland's central bank surprised markets earlier this month
with its first intervention since introducing a free float in
2000, to temper the surging currency's impact on exports and the
economy overall.
The Polish central bank's Monetary Policy Council (MPC) will
start its two-day monthly meeting on Tuesday, with analysts
expecting the rate-setting panel to leave rates flat for a 10th
consecutive month.
The MPC will also focus on the issue of the central bank's
2009 profits after it quarrelled with the central bank's
management board over calculation methods. The amount of profit
is important for the government as the bulk of it will be used
to help plug the state budget deficit.
A Reuters polls of analysts showed the zloty could gain some
3 percent in the next 12 months. []
BONDS
The region's bond markets also firmed on Monday, but dealers
said investors are still watching closely the situation in
debt-stricken Greece and other periphery euro zone countries.
"Yields have dropped, but the market is cautious as the
Greeks (government debt) are being beaten again... and also the
Italians, the Spanish, Portuguese and the Irish, the euro zone
periphery," one Budapest-based trader said.
Greek 5-year credit default swaps (CDS) rose to 619 basis
points, while Portuguese CDS rose to a record high of 288 basis
points, CMA datavision showed. []
By comparison, Poland's 5-year CDS stood at around 105 bps,
while Hungary's was at 187 basis points on Monday.
Central and eastern European assets have not been greatly
impacted by Greece's debt woes so far, thanks to the region's
relatively buoyant growth outlook and low debt and budget
deficit levels.
However, worries about the heavily-indebted euro zone
periphery have dampened investor appetite towards the region.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.392 25.392 0% +3.65%
Polish zloty <EURPLN=> 3.876 3.883 +0.18% +5.88%
Hungarian forint <EURHUF=> 263.34 263.5 +0.06% +2.66%
Croatian kuna <EURHRK=> 7.256 7.255 -0.01% +0.73%
Romanian leu <EURRON=> 4.118 4.123 +0.12% +2.9%
Serbian dinar <EURRSD=> 98.78 99.043 +0.27% -2.94%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 53bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +67bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +64bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +353bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +298bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +248bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -5 basis points to +420bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +357bps over bmk*
10-yr T-bond HU10YT=RR -7 basis points to +334bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1121 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=>
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World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
editing by Tony Austin)
