* Forint leads losses on worries over euro zone debt
* Hungary's assets additionaly hit by domestic factors
(Updates forint drop, adds bonds, details)
By Dagmara Leszkowicz
WARSAW, April 27 (Reuters) - Hungary's forint fell 1 percent
to lead losses among central European currencies on Tuesday as
concerns over Greece's aid package and other euro zone periphery
debt put pressure on the region.
Hungary's forint and bonds were additionally hit by
Tuesday's comments by an official from Fidesz, which won by a
landslide in the second round of Hungary's election on Sunday,
saying central bank Governor Andras Simor should resign his
post. []
"Sentiment has worsened due to the Greek and Portuguese
worries," a Budapest-based currency dealer said.
"The (Fidesz) comments on (central bank Governor) Simor are
not positive either but I think perhaps this is not what
determines the extent of the weakening."
Hungarian assets rallied following a decisive victory in
the first round of elections on April 11 that first gave Fidesz
a strong mandate for deep economic reforms in the country of 10
million that has relied on IMF aid.
But tension between the new ruling party and the central
bank, and a 25 basis point rate cut on Monday that was followed
by comments from Simor that did not rule out interventions on
the FX market have made the bounce short-lived. []
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Analysts say persistent uncertainty over heavily-indebted
Greece could also continue affecting emerging Europe.
By 1032 GMT the forint <EURHUF=> fell 1.1 percent against
the euro, falling back from a one-week high hit on Monday.
Poland's zloty <EURPLN=> dropped 0.9 percent to the weak
side of 3.90 per euro. The Czech crown <EURCZK=> and Romania's
leu <EURRON=> fell 0.1-0.3 percent against the common currency.
Poland's central bank surprised markets earlier this month
with its first intervention in 10 years to temper the surging
zloty's impact on exports and the economy, and this has hung
over the region since.
A BETTER CASE
So far, however, the region's better growth outlook and
lower debt levels compared to euro zone periphery states have
continued to attract investors fleeing the euro, and pushed
currencies, bonds and stocks to multi-month highs this year.
"Greek worries are not affecting the region heavily so far.
But in the case of extreme measures we would be hurt as well,"
said Rafal Benecki, an economist at ING bank.
Greek 5-year credit default swaps (CDS) hit a fresh high on
Tuesday, touching 769 basis points, while the Czech 5-year CDS
stood at 77 bps, and Poland's at around 105 basis points.
The Polish central bank's Monetary Policy Council (MPC)
starts its two-day meeting on Tuesday and its decision on rates
will be announced on Wednesday.
The market expects the 10-strong panel to leave interest
rates unchanged at an all-time low of 3.5 percent for the 10th
consecutive month and to start tightening monetary policy in the
second half of 2010.
In the Czech Republic, interest rate cut bets have been
keeping the crown in correction mode in the past few days,
although dealers said lower levels could draw the interest of
exporters who will look to sell euros.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.464 25.431 -0.13% +3.35%
Polish zloty <EURPLN=> 3.913 3.879 -0.87% +4.88%
Hungarian forint <EURHUF=> 266.17 263.18 -1.12% +1.57%
Croatian kuna <EURHRK=> 7.249 7.255 +0.08% +0.83%
Romanian leu <EURRON=> 4.127 4.115 -0.29% +2.68%
Serbian dinar <EURRSD=> 99.238 99.057 -0.18% -3.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 56bps over bmk*
7-yr T-bond CZ7YT=RR +10 basis points to +77bps over bmk*
10-yr T-bond CZ10YT=RR +3 basis points to +66bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +359bps over bmk*
5-yr T-bond PL5YT=RR +8 basis points to +306bps over bmk*
10-yr T-bond PL10YT=RR +7 basis points to +254bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +7 basis points to +428bps over bmk*
5-yr T-bond HU5YT=RR +13 basis points to +375bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +338bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1234 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 Stephen Nisbet)
