* FX mixed, zloty regains ground after falls
* Czech, Hungarian debt markets await auctions
(Updates throughout)
By Marius Zaharia and Sandor Peto
BUCHAREST/BUDAPEST, April 21 (Reuters) - Central European
currencies were mixed late on Tuesday, regaining ground after
German economic sentiment improved and the dollar retreated
against the euro.
A Czech and a Polish central banker both indicated that
interest rate cuts, which have contributed to steep falls in
regional currencies since last summer, can continue.
However, dealers said news about the state of the global
economy will remain key to the region which is reliant on
exports and foreign financing, and currencies were buoyed by
news Germany's ZEW think-tank economic sentiment indicator rose
much more than expected to 13.00 in April, its highest level in
almost two years, from -3.5 in March.
"The ZEW index was key in the rebound of currencies in the
region and the dollar's firming (against the euro) was also
reversed, while equity markets are mixed," one Budapest-based
dealer said.
The region's currencies often move in the opposite direction
to the dollar against the euro, because a firming of the dollar
often reflects a decline in investor appetite for risk.
Poland's zloty <EURPLN=> which led earlier losses, traded at
4.399 against the euro at 1401 GMT, weaker by 0.14 percent.
"For the rest of the week I expect the zloty to move in a
4.30-4.55 corridor," one dealer in Warsaw said. "If the stock
markets continue to fall, we could see a move towards 4.45-4.50,
if there is some relief, we should be closer to 4.30."
Polish central bank Governor Slawomir Skrzypek said the bank
was still in a monetary policy easing bias.[] A
dovish Czech central banker also said interest rates may go
lower. []
The Czech crown <EURCZK=> still firmed by 0.16 percent to
26.96 per euro, the Hungarian forint <EURHUF=> gained 0.11
percent and Romania's leu <EURRON=> rose by 0.19 percent.
DEBT AUCTIONS EYED
Successful domestic bond auctions and easing credit default
swaps have indicated a better mood in the region in the past few
weeks, helped by a slight improvement in global investor
sentiment and more International Monetary Fund (IMF) aid.
Czech bond prices were slightly stronger before a 10-year
government bond auction on Wednesday, which will test demand for
longer-dated papers. []
Finance Minister Miroslav Kalousek said on Tuesday the Czech
Finance Ministry has begun to consider tapping international
markets with a eurobond again after credit spreads dropped.
[]
"Everybody was counting that at some stage the government
would come with a eurobond," said Dalimil Vyskovsky, a trader
with Komercni Banka.
"The process of tightening of asset swaps has continued for
the past few weeks, and has had more to do with risk repricing
than with eurobond news."
Hungary, which has been unable to sell government bonds
since October apart from one day of auctions, will offer a low
amount of bonds at auctions to be held on Thursday.
"If the first auction in months ends up being a dud, that
would send a very bad signal to markets," one trader said. "So
we look at that auction as a big test."
Hungary's central bank kept interest rates on hold on
Monday, saying that the recovery in the region's markets
remained fragile.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.96 27.003 +0.16% -0.77%
Polish zloty <EURPLN=> 4.399 4.393 -0.14% -6.46%
Hungarian forint <EURHUF=> 299 299.33 +0.11% -11.86%
Croatian kuna <EURHRK=> 7.415 7.383 -0.43% -0.67%
Romanian leu <EURRON=> 4.237 4.245 +0.19% -5.25%
Serbian dinar <EURRSD=> 93.037 92.73 -0.33% -3.82%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +24 basis points to 215bps over bmk*
4-yr T-bond CZ4YT=RR -9 basis points to +197bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +293bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -23 basis points to +903bps over bmk*
5-yr T-bond HU5YT=RR -61 basis points to +856bps over bmk*
10-yr T-bond HU10YT=RR -46 basis points to +779bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1601 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Writing by Marius
Zaharia/Sandor Peto; Editing by Ruth Pitchford)
