* Zloty down but still close to 14-month highs
* Romania central bank head concerned about stronger leu
* Markets eye ECB, BOE rate decisions later in session
By Sam Cage
BUCHAREST, March 4 (Reuters) - Emerging European currencies
fell in early trade on Thursday, giving up some of the previous
day's gains, when the Polish zloty was boosted by hawkish
comments from the central bank governor.
The Romanian leu came under pressure on Thursday after
Romania's central bank governor said he was concerned the leu
could rise too far as the country struggles to recover from
recession. []
"He doesn't want the leu to firm, so this is also helping
depreciation of the local currency," one Bucharest-based dealer
said. "I don't think they will let it firm beyond 4 in the next
months."
The leu <EURRON=> was down 0.2 percent at 4.094 per euro in
early trade.
Regional currencies have enjoyed a strong run in the last
few weeks and have been further helped by a new Greek austerity
plan, which has supported investors' risk appetite.
Markets will keep a wary eye on rate decisions by the
European Central Bank and the Bank of England, due later in the
session as any change in the direction of rates could spark
domestic action in Central and Eastern Europe. []
At 0907 GMT, the Polish zloty <EURPLN=> was down 0.3 percent
from Wednesday's close at 3.913 per euro, retreating from
14-month highs of around 3.89 hit during the previous session
after central bank governor Slawomir Skrzypek said policymakers
should consider tightening rates. []
"I think it should be quiet today in the currency market,
and the zloty should stabilise at around 3.90-3.92 against the
euro," said one Warsaw-based dealer.
The Czech crown <EURCZK=> was 0.3 percent lower and the
Hungarian forint <EURHUF=> fell 0.2 percent.
Hungarian government bonds gave up some ground after
rallying in past weeks, with yields rising by about three basis
points from Wednesday. Polish bonds remained relatively stable.
"Sentiment has turned mildly negative," one Budapest-based
fixed income trader said. "It's possible that (Hungarian) yields
move further up by a few basis points. Next week we will have
inflation figures and those may affect the market."
Komercni Banka trader Dalimil Vyskovsky said local Czech
dealers were switching from short-term bonds to a nine-year bond
in an auction on Wednesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.815 25.733 -0.32% +1.95%
Polish zloty <EURPLN=> 3.913 3.902 -0.28% +4.88%
Hungarian forint <EURHUF=> 266.32 265.88 -0.17% +1.51%
Croatian kuna <EURHRK=> 7.269 7.267 -0.03% +0.55%
Romanian leu <EURRON=> 4.094 4.086 -0.2% +3.5%
Serbian dinar <EURRSD=> 99.65 99.553 -0.1% -3.78%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -21 basis points to 80bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +117bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +296bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -8 basis points to +561bps over bmk*
5-yr T-bond HU5YT=RR -11 basis points to +509bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +458bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1157 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Additional reporting by Reuters bureaus; Editing by Susan
Fenton)
