* Romanian leu rebounds, dealers cite c.bank intervention
* Currencies fall, led by zloty
* Hungary seen cutting rates 50 bps, decision at 1200 GMT
(adds Romanian leu recovery)
By Marius Zaharia
BUCHAREST, Sept 28 (Reuters) - The Romanian leu regained
morning losses on Monday with dealers citing covert intervention
by the central bank being behind the move, while the Hungarian
forint weakened ahead of an expected 50 basis point rate cut.
The Romanian central bank declined to comment on any
potential intervention.
On Monday, the leu rebounded from morning lows to trade flat
at 1041 GMT, outperforming peers.
"The central bank is intervening heavily, they probably sold
over 200 million euros today," one dealer said.
Dealers said central bank interventions countered weakening
pressure stemming from coalition rifts.
They speculate this adds to around 300-400 million euros it
may have sold last week and to about 4.5 billion euros analysts
estimate it had sold since the Lehman Brothers collapse to prop
up the currency.
Political risk came back in focus in Romania after the
government survived a no-confidence vote last week and the
centrist prime minister sacked a leftist minister on Monday ,
increasing tensions in the ruling coalition ahead of
presidential polls. []
Elsewhere, Hungary is seen easing rates to 7.5 percent on
Monday in what would be the third reduction in a row to fight a
painful recession [], highlighted by unemployment
data earlier in the day [].
The June-August 9.9 percent figure matched its highest on
record during the current crisis, and the peak since the third
quarter of 1996.
The forint <EURHUF=> traded at 269.76 per euro, 0.3 percent
down from the previous domestic close.
"Given the dovish central bank (NBH) outlook we keep our
cautious stance on HUF as we continue to think that stronger
appreciation pressure would lead to stronger rate cuts and the
NBH still prefers a range of 265-280," UniCredit said in a note.
It said a "dovish outcome" should also help bonds,
particularly short-term ones, to extend last week's gains.
Romania is also seen cutting rates this week []
while Poland is expected to hold fire. []
In Poland, the zloty <EURPLN=>, which was down 0.6 percent
to 4.227, hit a fresh two-week low following stock losses
globally. Analysts also said fiscal woes as well as a possible
dividend payout from state insurer PZU, which could be exchanged
into euro, weigh on the unit.
Polish bonds were slightly weaker in line with the zloty,
while Hungarian paper moved sideways ahead of the rate decision.
BUDGET WOES
Poland's public debt is expected to rise to 54.7 percent of
GDP next year, close to the constitutional ceiling of 55 percent
which will force it to significantly cut spending and present a
balanced budget, a news agency reported [].
In Czech Republic, the crown <EURCZK=> edged down as
domestic markets were closed for a holiday. On Friday, investors
were relieved to see the parliament approving a 2010 austerity
plan, removing the risk of a government collapse [].
Markets were awaiting comments from policymakers, bankers
and corporate officials on the strength of a recovery in the
region at the Reuters Central and Eastern European investment
Summit from Sept. 28-30 [].
The region's second-largest lender, Raiffeisen International
<RIBH.VI> said non-performing loans will peak next year, and
that the bank started to ease credit conditions again in some
countries as currencies have stabilised [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.211 25.148 -0.25% +6.12%
Polish zloty <EURPLN=> 4.227 4.2 -0.64% -2.65%
Hungarian forint <EURHUF=> 269.76 268.91 -0.32% -2.3%
Croatian kuna <EURHRK=> 7.291 7.267 -0.33% +1.01%
Romanian leu <EURRON=> 4.194 4.196 +0.05% -4.28%
Serbian dinar <EURRSD=> 92.45 92.71 +0.28% -3.21%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -5 basis points to 166bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +182bps over bmk*
10-yr T-bond CZ10YT=RR -14 basis points to +176bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +337bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +292bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +546bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +493bps over bmk*
10-yr T-bond HU10YT=RR -9 basis points to +429bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1341 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;
Editing by Toby Chopra)
