* Currencies edge up on improved sentiment
* Analysts expect Polish rates unchanged on Wednesday
By Marius Zaharia
BUCHAREST, April 29 (Reuters) - Emerging European currencies
edged up in early trade on Wednesday as an uptick in global
sentiment boosted riskier assets, and ahead of a central bank
meeting in Poland seen key for the future of the zloty.
Poland, where a higher-than-expected budget deficit is
hampering its goal to enter the euro zone in 2012, is seen by
most analysts holding rates unchanged on Wednesday.
The regional heavyweight has gone through an aggressive 225
basis point easing since November to help its slowing economy,
but this has added a significant weakening pressure on the
zloty, which has lost some 30 percent from summer highs.
"Markets might interpret a rate cut ... as a sign that the
Monetary Policy Council is ignoring the exchange rate effects of
its decision (and) that might put new pressure on the currency,"
Commerzbank said in a morning note.
"If on the other hand the MPC made future rate decisions
dependent on a stable zloty then this would constitute a
positive sign for the Polish currency."
By 0720 GMT, the zloty <EURPLN=> rose 0.4 percent from the
domestic close, the Hungarian forint <EURHUF=> gained 0.3
percent, while the Czech crown <EURCZK=> and the Romanian leu
<EURRON=> both added some 0.2 percent.
Dealers said the region gained slightly from a tolerance to
risk triggered by benign U.S. housing data on Tuesday.
However, concerns about a global swine flu outbreak still
weighed, preventing a sharp trend reversal as seen throughout
the first months of this year during global mood shifts.
The swine flu threatened to add to a global slowdown,
hitting central Europe's export-driven economies, which have
already buckled under a drop in demand in the euro zone.
The region also got a lift on Tuesday from Poland's
financial watchdog, which halved its FX option exposure forecast
to 4.5 billion zlotys. []
"Emerging markets are opening strong, the forint firmed
already yesterday as the zloty regained strength," a Budapest
dealer said. "Potential losses ... due to option positions can
be lower than expected, that's what strengthened the zloty."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.65 26.71 +0.23% +0.39%
Polish zloty <EURPLN=> 4.467 4.485 +0.4% -7.88%
Hungarian forint <EURHUF=> 292.06 292.9 +0.29% -9.76%
Croatian kuna <EURHRK=> 7.428 7.436 +0.11% -0.85%
Romanian leu <EURRON=> 4.205 4.213 +0.19% -4.53%
Serbian dinar <EURRSD=> 95.35 95.02 -0.35% -6.16%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 190bps over bmk*
4-yr T-bond CZ4YT=RR -6 basis points to +196bps over bmk*
8-yr T-bond CZ8YT=RR -7 basis points to +293bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +414bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +342bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +299bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -26 basis points to +878bps over bmk*
5-yr T-bond HU5YT=RR -30 basis points to +820bps over bmk*
10-yr T-bond HU10YT=RR -27 basis points to +729bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1020 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;
editing by Toby Chopra)
