* Hungary cuts rates by 50 bps as expected
* Romanian leu rebounds, dealers cite c.bank intervention
* Zloty rebounds, fears over dividend payout fade
(Updates throughout)
By Marius Zaharia and Dagmara Leszkowicz
BUCHAREST/WARSAW, Sept 28 (Reuters) - Hungary's forint was
down slightly after an interest rate cut on Monday, while the
Romanian leu regained morning losses with dealers saying covert
intervention by the central bank was behind the move.
Hungary's central bank cut rates by 50 basis points,
bringing the key rate to 7.5 percent. []
"In case market conditions remain supportive and Hungary's
risk assessment does not deteriorate, further cuts will be
possible this year, taking the rate down to 7 percent or perhaps
even below that level," said Gyorgy Barta at CIB Bank.
At 1318 GMT the forint <EURHUF=> was 0.2 percent weaker to
the euro, trading at 269.43, while the country's short-end paper
yields fell slightly and long-dated bonds rose after the
decision.
Romania's leu <EURRON=> was 0.1 percent down to the common
currency. The country's central bank declined to comment on talk
of intervention.
"The central bank is intervening heavily. They probably sold
over 200 million euros today," one dealer said.
Dealers 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.
Dealers said central bank intervention countered weakening
pressure stemming from coalition rifts.
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. []
Romania is seen cutting rates this week []
while Poland is expected to hold fire. []
In Poland, the zloty <EURPLN=> was almost flat, reversing
some of its previous losses after it had hit a fresh two-week
low following stock losses globally.
"It looks like big London names decided to buy the zloty
again as a fear over a possible (PZU) dividend payout somehow
subsided," said one Warsaw-based dealer.
Last week Poland agreed with Dutch firm Eureko [] to
postpone for a week a shareholders meeting of Polish insurer PZU
that may decide on a big dividend payout aimed at helping settle
a long-running dispute between the two owners [].
Polish bonds also reversed previous losses, tracking the
zloty.
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=> 25.207 25.148 -0.23% +6.13%
Polish zloty <EURPLN=> 4.201 4.2 -0.02% -2.05%
Hungarian forint <EURHUF=> 269.43 268.91 -0.19% -2.18%
Croatian kuna <EURHRK=> 7.28 7.267 -0.18% +1.17%
Romanian leu <EURRON=> 4.2 4.196 -0.1% -4.42%
Serbian dinar <EURRSD=> 92.43 92.71 +0.3% -3.19%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -4 basis points to 167bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +183bps over bmk*
10-yr T-bond CZ10YT=RR -13 basis points to +176bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +332bps 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 -1 basis points to +542bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +508bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +450bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1418 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 and
Dagmara Leszkowicz; Editing by Toby Chopra and Victoria Main)
