* Fx rangebound, mkt awaits Hungary rate decision (1200 GMT)
* Hungarian bond yields trade at 5-week lows#
* Equities mostly firm, market mood supportive
(Adds new prices and comments)
By Krisztina Than and Sandor Peto
BUDAPEST, Sept 27 (Reuters) - Central European currencies
held onto last week's gains early on Monday, moving in tight
ranges ahead of the Hungarian central bank's (NBH) interest rate
decision at 1200 GMT.
Hungarian government bond yields traded at 5-week lows ahead
of the rate decision, dropping 5-8 basis points in the morning,
with 3-year bonds trading at yields around 6.52 percent.
The government triggered a rally in Hungarian bonds earlier
this month by pledging that it would cut the budget deficit in
2011, but markets still await the details of that plan.
A rise by Asian equities and the dollar's weakness on Monday
signalled continued risk appetite and helped assets in the
Europen Union's emerging markets, although the dollar regained
some ground against the euro.
Hungary's forint <EURHUF=> was bid at 277.01 to the euro at
0935 GMT, 0.1 percent firmer than on Friday and near 6-week
highs reached earlier in the day at 276.48.
The Czech crown <EURCZK=> also firmed 0.1 percent to 24.583,
the zloty <EURPLN=> was flat at 3.953, while the Romanian leu
was 0.1 percent weaker at 4.245. All were rangebound.
Equity markets in the region were slightly firmer as western
European stock markets were trading near Friday's closing levels
and domestic news was giving few clues.
HUNGARY MEETING IN LIMELIGHT
The Hungarian central bank is expected to keep its key base
rate on hold at 5.25 percent <NBHI> at its meeting, but its
comments afterwards may move markets, dealers said.
Markets will gauge whether the bank still considers hiking
interest rates an option after two of 7 rate setters voted for a
rate rise at its August meeting and after the government pledged
to cut the 2011 budget deficit to 2.8 percent of GDP.
"They will not hike, but the question is how worried a tone
they will strike in their comments," a Hungarian dealer said.
All 27 participants in a Sept 22-23 Reuters poll forecast
that the central bank (NBH) would keep its base rate on hold at
5.25 percent <HUREPO1>, waiting for more fiscal policy details
next month. []
"We see no reason for the central bank to alter monetary
conditions at this point, given that the MPC is in a wait and
see mode ahead of the release of 2011 budget details," CIB Bank
said in a morning note.
The economies of Hungary and Romania -- the recipients of
international aid since 2008 -- are regarded as more vulnerable
to shifts in global financial market sentiment than other
economies in the region like the Czech Republic and Poland.
The Budapest stock market <> was up 0.4 percent at 1002
GMT, Prague <> was up 0.1 percent, while Warsaw <> was
steady. Romania's <> stock index firmed 1.4 percent, but
the leu eased slightly.
The International Monetary Fund said on Friday its board
approved $1.19 billion in assistance for Romania and granted the
country's request for a waiver on certain performance targets.
[]
Dealers said the Czech crown would take its cue from the
region. The currency has fallen into a range around 24.600 for
the past month and, despite several attempts, has been unable to
break beyond 24.500.
Some dealers said that after these efforts, the currency
could be open to weakening, though it looked like staying stable
this week, marked by a market holiday on Tuesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.583 24.617 +0.14% +7.06%
Polish zloty <EURPLN=> 3.953 3.954 +0.03% +3.82%
Hungarian forint <EURHUF=> 277.01 277.19 +0.06% -2.4%
Croatian kuna <EURHRK=> 7.29 7.291 +0.01% +0.26%
Romanian leu <EURRON=> 4.245 4.241 -0.09% -0.18%
Serbian dinar <EURRSD=> 105.6 105.48 -0.11% -9.2%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to +85bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +100bps over bmk*
10-yr T-bond CZ9YT=RR +10 basis points to +104bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +401bps over bmk*
5-yr T-bond PL5YT=RR +13 basis points to +365bps over bmk*
10-yr T-bond PL10YT=RR +5 basis points to +320bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -5 basis points to +563bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +523bps 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 1135 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Krisztina Than/Sandor Peto; Editing by Tim
Pearce)
