* Currencies mixed, mkts await Fed decision
* Polish current zloty level satisfactory-cbank governor
* Czech govt seen winning confidence vote
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Aug 10 (Reuters) - Central European currencies were
mixed on Tuesday as market players waited for the U.S. Federal
Reserve's policy meeting later in the day but the region's
decent growth outlook and relatively healthy debt positions
helped units defend their multi-month highs.
There has been speculation the Fed will comment on a
softening recovery in the United States and start a new phase of
quantitative easing to support growth.
"We are expecting a stabilisation (at the forex market)
until the Fed's statement release," analysts at Bank Zachodni
WBK wrote in a note.
By 0858 GMT The Polish zloty <EURPLN=> was flat against the
euro, hovering near its 3-month highs, and the Czech crown
<EURCZK=> slipped 0.1 percent, slightly off its 20-month highs.
Hungary's forint <EURHHUF=> was some 0.1 percent stronger,
nearing its 1-month high against the euro, while Romania's leu
<EURRON=> was stable.
The region's stocks slipped into negative territory, losing
between 0.4-1.4 percent and the euro -- the region's main
reference currency -- fell more than 0.5 percent against the
dollar.
"The eurodollar has been overbought, whereas the zloty is
still undervalued," said one Warsaw-based dealer. "And it looks
like stocks are key drivers for currencies now."
The Polish central bank's governor Marek Belka on Tuesday
said the current zloty level was satisfactory and if anything
threatened the Polish unit, it was sharp appreciation rather
than depreciation. []
The zloty has swung back and forth in recent months. The
central bank intervened to counter its rising strength in April,
while there were reports in May that the finance ministry had
sold euros on the market to stop its sharp fall.
Elsewhere, the new Czech centre-right government, whose
austerity pledges have made Czech assets among the best
performing in central Europe, was seen easily winning a lower
house confidence vote on Tuesday afternoon.
DEBT EYED
Polish and Hungarian bonds were stable on Tuesday, with
Hungary's paper yields slightly lower at the shorter-end of the
curve. Dealers said investors were eying the country's switch
tender due on Wednesday.
"That, along with a regular bond auction on Thursday, is
likely to put supply side pressure on the market, especially on
the long end," a dealer in Budapest said."
"At these yield levels, and with the summer lull on us in
full, the auction might see fewer bids than usual."
In Romania the finance ministry has successfully placed 1.3
billion lei in 6-month treasury bills on Monday, with an average
yields at 6.99 percent, slightly below its self-imposed top
yield of 7 percent.
Central European government finances have come under closer
scrutiny after Hungary suspended talks with the International
Monetary Fund last month, while worries remain over Romania's
IMF-mandated austerity measures.
Romania has sold about 24 billion lei this year and Reuters
calculations showed it needs to raise some 11 billion lei for
the rest of 2010, provided IMF-led aid is disbursed on time and
it rolls over euro-denominated treasury bills due in November.
Poland and the Czech Republic are seen better placed for
economic recovery this year compared to Hungary and Romania, and
the high volume of bids at the last bond tenders bode well for
governments' efforts to meet record borrowing needs this year.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.756 24.727 -0.12% +6.31%
Polish zloty <EURPLN=> 3.971 3.972 +0.03% +3.35%
Hungarian forint <EURHUF=> 277.7 278 +0.11% -2.65%
Croatian kuna <EURHRK=> 7.22 7.219 -0.01% +1.24%
Romanian leu <EURRON=> 4.229 4.229 0% +0.2%
Serbian dinar <EURRSD=> 104.83 105.39 +0.53% -8.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 110bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +113bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +115bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +405bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +387bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +329bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +582bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +536bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +457bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1058 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 Andrew Heavens)
