* Forint trims gains, other FX down after stocks fall
* Further Fed, ECB moves key for region
* Region's outlook still positive, leu hit by politics
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Nov 17 (Reuters) - Hungary's forint trimmed morning
gains on Tuesday while other currencies followed the region's
and western European stocks into negative territory, but dealers
said the outlook for the units remains positive.
The forint has benefited from investors' taking advantage of
its high interest rate premium to other currencies. Romania's
leu is stuck in ranges as the country struggles to form a new
government, raising risks to its package of IMF support.
"The forint has outperformed other currencies in the region
(in the past days)," said one Budapest-based dealer.
"The explanation may be simply that some big banks have come
to the decision that it's worth buying the forint to exploit the
(relatively high) carry."
Hungary's main interest rate stands at 7.0 percent and is
seen moving lower next week, but it is still twice as high as in
Poland, where the key rate is at an all-time low of 3.5 percent.
But the Hungarian bank is expected to cut rates further, as long
as there are no signs of further weakness for the forint, hit by
one of Europe's harshest currency sell-offs last year.
Hungary's central bank deputy governor Ferenc Karvalits said
on Monday a benign inflation outlook and improved risk
assessment allowed the central bank to proceed with cautious
interest rate cuts. []
At 0957 GMT the forint <EURHUF=> was relatively stable at
265.66 against the euro.
Hungary's bonds firmed ahead of the government's T-bills
auction, with dealers saying some investors are trying to get
cheaper prices.
GDP KEY
The Polish zloty <EURPLN=> led losses on Tuesday, in what
dealers said looked like consolidation in recent days' trade.
They said the outlook for the currency is still positive -- most
of the region's currencies have gained 3-4 percent in the last
month.
"The direction for now is up, but it is evidently a
consolidation of the recent gains," said one Warsaw-based
dealer.
"I think GDP data (later this month) may be a factor that
can push the unit to even below 4.0 to the euro."
At 1049 GMT, the zloty traded at 4.1056 against the euro.
Poland's statistics office releases third quarter GDP data
on November 30 and the market widely expects growth of 1.3
percent year-on-year -- reaffirming the country's success in
avoiding recession on the back of the financial crisis.
In the Czech Republic, Slovakia, Romania and Hungary, GDP
data showed year-on-year contractions in the third quarter but
also showed signs of recovery, with the Czech and Slovak
economies growing on a quarterly basis.[]
In Romania, the leu <EURRON=> was range-bound, with dealers
saying the currency showed little reaction to the central bank's
decision on Monday to cut minimum reserve requirements on
foreign currency-denominated liabilities to 25 percent from 30
percent previously. []
The Czech crown <EURCZK=> was a touch down against the euro,
but the Czech market was shut on Tuesday for a national holiday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.469 25.442 -0.11% +5.04%
Polish zloty <EURPLN=> 4.094 4.087 -0.17% +0.51%
Hungarian forint <EURHUF=> 265.66 265.68 +0.01% -0.79%
Croatian kuna <EURHRK=> 7.313 7.304 -0.12% +0.71%
Romanian leu <EURRON=> 4.289 4.29 +0.02% -6.4%
Serbian dinar <EURRSD=> 94.31 94.21 -0.11% -5.12%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +13 basis points to 112bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +110bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +89bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +369bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +279bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +521bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +450bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +396bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0957 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; editing by Patrick Graham)
