* Fx regain strength, zloty firms to 14-month highs
* Poland should consider rate hike, cbank head says
* Czech, Polish bond tenders attract strong demand
(Adds Skrzypek, details.)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, March 3 (Reuters) - Central European
currencies rebounded on Wednesday, led by the zloty <EURPLN=> as
Poland's central bank governor Slawomir Skrzypek said the bank
should consider tightening interest rates.
The past few weeks' trend of firming, which had lost steam
early in the day, also got new fuel from strong Polish and Czech
bond tenders, while fresh news about a Greek austerity plan
supported investors' risk appetite.
The Polish zloty which eased in morning trade gained about
half percent against the euro after Skrzypek spoke, to 14-month
highs around 3.9, firmer by 0.3 percent on the day by 1321 GMT.
"The MPC should start considering tightening its monetary
policy, looking at the end of the (inflation) projection's
horizon," the rate setter told reporters. []
The Czech crown <EURCZK=> and the Romanian leu <EURRON=>
gained 0.1 percent, while Hungary's forint was steady.
After interest rate cuts during the global crisis, the
Polish and Czech central banks are expected to shift to rate
hikes later this year, while analysts believe Hungary and
Romania, where rates are higher, still have room to cut.
BOND AUCTIONS STRONG
The region's stock markets, where increased volatility
replaced earlier strong gains this year, were mixed, but
government bond tenders showed continuing solid demand.
Demand for Czech bonds due in 2019 reached double of the
offer and the average yield dropped. [] The auction
bonds due 2019 <CZ1002471=>, whose yield has dropped to a
one-month low of 4.127/3.999 percent, were down 40 basis points
from a February peak.
Poland sold 4.762 billion zloty ($1.64 billion) worth of
bonds maturing in 2015, 2019 and 2029 in exchange for papers
expiring this year. Skrzypek's comments did not affect prices
and the market was optimistic over Poland's growth prospects.
"Demand was good, prices were good. So we had another
successful tender, underpinning the already positive sentiment,"
said Maciej Slomka, chief fixed income dealer at Pekao Bank.
The Romanian leu already bucked the trend when other units
eased in the morning and stayed close to a one-month high after
consumption, the largest part of the country's economy, rose 1.1
percent on the quarter in October-December. []
Romanian consumption data followed a stronger-than-expected
report on Poland's economy on Tuesday and surveys showing
manufacturing on the rise -- all of which had lifted currencies
in the region. []
The Czech crown <EURCZK=> firmed to 25.729 per euro. The
International Monetary Fund said on Tuesday the country's
exchange rate was in line with fundamentals. []
Greece's struggle to rein in its budget deficits has raised
market volatility in the region and pushed the euro, central
Europe's reference currency, to a 9-1/2 month low against the
dollar this week. []
But it has also highlighted central Europe's better debt
position, boosting assets and often breaking the usual
correlation the region's currencies have with the euro/dollar.
On Wednesday the euro rose after a source said Greece's
cabinet had approved a sweeping new austerity programme.
[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.729 25.751 +0.09% +2.29%
Polish zloty <EURPLN=> 3.898 3.911 +0.33% +5.28%
Hungarian forint <EURHUF=> 265.99 266.04 +0.02% +1.64%
Croatian kuna <EURHRK=> 7.269 7.261 -0.11% +0.55%
Romanian leu <EURRON=> 4.099 4.104 +0.12% +3.38%
Serbian dinar <EURRSD=> 99.57 99.6 +0.03% -3.71%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +11 basis points to 97bps over bmk*
7-yr T-bond CZ7YT=RR -6 basis points to +118bps over bmk*
10-yr T-bond CZ10YT=RR -5 basis points to +96bps over bmk*
All data taken from Reuters at 1421 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/Sandor
Peto; Editing by Susan Fenton and Toby Chopra)
