* Zloty off highs ahead of Polish rate decision
* Other FX also weaker, market awaits Bernanke's speech
* Region's debt not affected by worries over Greece
(Adds fixed income, detail)
PRAGUE/WARSAW, Feb 24 (Reuters) - Central European
currencies dipped from recent highs on Wednesday, with the zloty
just off a 13-month peak before an expected no change decision
from Poland's new Monetary Policy Council and markets looking to
testimony from the U.S. Federal Reserve chief later in the day.
The central bank's MPC is meeting for the first time with
all nine new members since they were elected to the 10-member
body over the past few months.
Analysts expect them to leave the key interest rate at its
all-time low of 3.5 percent at least until the second half of
the year.
"The central bank will maintain its neutral monetary policy
bias," Commerzbank said.
"The zloty will therefore continue to be driven by general
market sentiment. Negative developments on U.S. and Asian
markets could therefore lead to profit taking for the zloty
today."
The zloty has firmed below 3.95 to the euro this week for
the first time since January 2009. It was bid at 3.996 to the
euro, down some 0.2 percent, at 1025 GMT.
Other currencies were also weaker, with the Romania leu
<EURRON=> and Hungary's forint <EURHUF=> both down 0.1 percent.
The Czech crown extended previous slight losses and was down
<EURCZK=> 0.3 percent at 25.841 per euro.
Dealers said markets were looking to testimony by Federal
Reserve chief Ben Bernanke to Congress later on Wednesday for
fresh policy signals, following a surprise rise in its discount
rate last week that spooked investors. []
"Bernanke speaks today. Until then I think (the forint) will
remain around 270, but taking the past weeks into account even
that may not trigger much action," a Budapest currency dealer
said.
REGION IMMUNE
Concerns over how big EU countries will bail out Greece have
caused some jitters in Central European markets, but budget
prospects in the region are better than in some euro zone
members, analysts said.
Greece, a euro zone member, has pledged to slash its deficit
by 4 percentage points this year to 8.7 percent amid market
turbulence that has sent government bond yields up.
Czech Finance Minister Eduard Janota said on Wednesday
Greece would find it impossible to slash its budget deficit as
fast as promised. []
Central European currencies have held onto firming paths
seen this year during the market volatility as investors seek
safer investments in the region.
"For the time being it seems the negative news has no major
impact on the central European region, which in itself is a
positive," the dealer said.
The region's bond markets also have not been affected by
worries over the heavily indebted euro zone periphery so far.
"This is actually our moment. The region as a whole is seen
as a safer place, among which Poland is shining," said Marek
Kaczor, fixed income dealer at PKO BP. "Currently Poland has
good publicity and the debt market is benefiting from it."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.841 25.755 -0.33% +1.85%
Polish zloty <EURPLN=> 3.996 3.988 -0.2% +2.7%
Hungarian forint <EURHUF=> 270.21 270 -0.08% +0.05%
Croatian kuna <EURHRK=> 7.292 7.282 -0.14% +0.24%
Romanian leu <EURRON=> 4.125 4.12 -0.12% +2.72%
Serbian dinar <EURRSD=> 99.529 99.18 -0.35% -3.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +6 basis points to 93bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +130bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +109bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +542bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +493bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +453bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1025 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus; writing by Jason Hovet and
Dagmara Leszkowicz; editing by Robin Pomeroy)
