* Forint recovers losses, other FX flat
* Leu trade quieter after cbank intervention this week
* Polish data awaited, could lend support
(Adds bonds, details, updates prices)
By Jason Hovet
PRAGUE, Sept 17 (Reuters) - The Hungarian forint edged up on
Friday, recovering some of the previous two days' losses, while
the Romanian leu moved sideways as activity eased after
suspected foreign exchange intervention this week.
The forint had fallen on the threat of a ratings downgrade
and uncertainty over fiscal plans to cut its debt, which also
weighed on bonds. []
Markets in Hungary are already looking to October municipal
elections after which more details on the 2011 budget are likely
to come out, and analysts say Hungarian assets will largely
track regional and global market moves until then.
On Friday, the forint <EURHUF=> added 0.1 percent to 282.35
to the euro by 1017 GMT to around levels seen at the start of
the month, following a stronger euro versus the dollar.
"The weakening dollar could also lend some additional
support to the forint, but the market seems to be waiting for
the details of the 2011 budget, which will not be announced
until early October," KBC analysts said in a midday note.
Hungarian bonds also supported the forint, with the 10-year
bond yield falling 6 basis points, erasing a Thursday rise.
Hungary's Economy Minister Gyorgy Matolcsy told Kossuth
radio on Friday that the central bank should introduce monetary
stimulus next year, while saying the economy could grow by 2.5
percent to 3.0 percent in 2011. []
Markets have been keeping a close eye on the sometimes
confusing comments from Hungary's centre-right government, which
has pledged to cut its budget deficit without IMF help.
POLISH EUROBOND
In Poland, the zloty <EURPLN=> was flat around 3.95 to the
euro. The Czech crown <EURCZK=> was flat at 24.68, around a
one-week low and back in a range it temporarily broke at the
start of the week when it hit 22-month highs.
Polish output data is due in the afternoon, and analysts
expect a 13 percent year-on-year rise for last month, which
could support assets. Polish and Czech bonds and currencies have
outperformed Hungarian and Romanian assets throughout the
summer, although a rally has started cooling this month.
Poland issued a 1 billion euro bond due in 2021 on Thursday
at 120 basis points above mid-swaps, following the Czech sale of
a 2 billion euro bond last week at a price a touch tighter.
With lower debt and better economic growth prospects than
many eastern European and euro zone periphery countries, Poland
and the Czech Republic have had an easier time on debt markets
than states like Romania, which has struggled with domestic debt
sales.
The Romanian leu <EURRON=> dropped 0.2 percent in thin trade
after what dealers said was probably central bank intervention
on Tuesday to lift the leu. The central bank has not commented
on possible interventions since late 2008. []
On the debt side, analysts say the finance ministry has
driven itself into a corner by refusing to sell bonds at yields
above 7 percent and faces a funding crunch in November when
yields could jump up to 1 percentage point. []
The fragile coalition government is struggling to push
through austerity measures to keep a 20 billion euro
International Monetary Fund-led bailout on track.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.67 24.681 +0.04% +6.68%
Polish zloty <EURPLN=> 3.946 3.953 +0.18% +4%
Hungarian forint <EURHUF=> 282.2 283.2 +0.35% -4.2%
Croatian kuna <EURHRK=> 7.281 7.261 -0.27% +0.39%
Romanian leu <EURRON=> 4.251 4.243 -0.19% -0.32%
Serbian dinar <EURRSD=> 105.33 105.35 +0.02% -8.97%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +7 basis points to 93bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +84bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +87bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +383bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +363bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +298bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +579bps over bmk*
5-yr T-bond HU5YT=RR -7 basis points to +535bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +441bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1157 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 Hugh Lawson)
