* Forint eases slightly before central bank meeting Monday
* Polish bonds stronger on rate setters' comments
* Czech government rift seen not hitting crown
(Recasts with new comments, prices)
By Maciej Onoszko and Sandor Peto
WARSAW/BUDAPEST, April 15 (Reuters) - The forint eased a
shade on Friday ahead of a meeting on Monday where the central
bank (NBH) is expected to keep interest rates unchanged despite
a rise in inflation pressure in Europe.
Polish bonds rose and the zloty dropped as new comments from
central bankers somewhat calmed expectations over the pace of
the Polish central bank's monetary tightening.
Hungary published its euro convergence plan aimed at showing
it can keep its budget deficit below the European Union ceiling,
3 percent of gross domestic product. []
But dealers said the programme did not contain any
significant new details that could move markets. Attention will
now turn towards Monday's meeting where the NBH is expected to
keep its base rate on hold at 6 percent. []
"What we would like to see most is how the NBH will commment
on higher than expected (March) inflation and within that core
inflation figures," one dealer said. "Polish and euro zone
inflation figures have also surprised on the upside."
The forint <EURHUF=> was bid at 267.04 against the euro at
1519 GMT, weaker by 0.1 percent from Thursday.
"We will watch the central bank ... I expect a range between
266 and 268 and if the bank is more hawkish than expected, the
forint may firm slightly," one dealer said.
CZECH POLITICAL TENSION, POLISH RATES
The forint has been the best-performing currency in the
region this year, lifted by the government's reform plan.
But this week it gave up some ground, shedding 1.4 percent,
while other currencies in the region firmed by 0.2-0.8 percent,
led by the crown <EURCZK=>.
On Friday the crown retreated, shedding 0.3 percent to
24.249 against the euro.
"There was a short squeeze before the weekend but ... (euro
vs crown) remains in a downtrend," one Prague-based dealer said.
The dealer added that the crown usually ignored political
noise and a rift in the Czech government coalition was unlikely
to move the currency significantly even if the cabinet
collapses. []
The zloty <EURPLN=> weakened 0.3 percent to 3.955, while
Polish bonds firmed, with yields dropping 1-4 basis points.
Polish central bank governor Marek Belka said late on
Thursday that the bank should not base monetary policy decisions
solely on the latest economic data, cooling expectations that a
March inflation spike would prompt a quick interest rate hike.
Another rate setter, Zyta Gilowska, did not rule out a
further rise in rates in May or June, but said further data
including net inflation was needed to see more clearly.
[]
"We already had a decline in yields in the morning and
Gilowska helped them a little in going further down," Bank BPH
bond trader Piotr Zoltowski said.
He added the market will be carefully watching all data
publications next week for clues about the likely pace of
monetary tightening.
On Monday the statistics office will release March data on
wages and employment, while industrial output data and the
producer price index will be published the next day.<ECONPL>
Elsewhere, Romania's leu <EURRON=> firmed 0.2 percent to
4.092.
The impact of renewed concerns over the euro zone debt
crisis this week has been moderate on Central Europe, but it
continues to pose risks on assets in the region, dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.249 24.171 -0.32% +3.1%
Polish zloty <EURPLN=> 3.955 3.944 -0.28% +0.08%
Hungarian forint <EURHUF=> 267.04 266.9 -0.05% +4.1%
Croatian kuna <EURHRK=> 7.354 7.364 +0.14% +0.35%
Romanian leu <EURRON=> 4.092 4.099 +0.17% +3.45%
Serbian dinar <EURRSD=> 101.76 101.24 -0.51% +4.09%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to -12bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +45bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +60bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +320bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +308bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +274bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +444bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +417bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +372bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1719 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Maciej Onoszko/
Dagmara Leszkowicz/Sandor Peto; Editing by Catherine Evans/Ruth
Pitchford)
