* Zloty leads regional gains on data, cbanker comments
* Crown erases losses from rate cut expectations
* Hungary's lower CPI boosts rate cut hopes, bonds
(Adds bonds, details)
By Jason Hovet and Marton Dunai
PRAGUE/BUDAPEST, Nov 11 (Reuters) - The Polish zloty added
to earlier steep gains to lead a region-wide rally on Wednesday
as favourable data and bullish comments from a central banker
coincided with strong global risk appetite.
Warsaw markets were closed for a local holiday but deals out
of London, mostly, pushed the illiquid zloty 1.4 percent higher
by 1431 GMT, dealers said, followed by the Hungarian forint
<EURHUF=> at 0.7 percent and the Czech crown at 0.4 percent
higher.
Traders all pointed to the weaker dollar and improved global
risk appetite as the reason behind the gains, saying that local
factors were less important, although recent favourable data and
comments helped.
After Poland on Tuesday posted a narrower September current
account gap than seen, central bank rate setter Marian Noga said
he expected the zloty to strengthen on the medium term as Poland
approaches euro zone membership. []
"That did it," the Budapest dealer added. "Some comments
from London reinforced that and now the zloty is the runaway
winner of the day. We're all following that lead."
The global risk rally has boosted emerging European assets,
but Hungary's forint and Poland's zloty are still off peaks from
September and October. Strategists expect more currency firming
ahead, mostly on the back of the dollar's weakness.
The Czech crown touched a six-week high on Wednesday,
erasing losses caused by expectations of an interest rate cut
that did not come last week.
CSOB FX analyst Jan Cermak said the crown could test 25 per
euro in the short run.
Markets will look to Friday's release of the minutes of the
Czech central bank meeting last week when policymakers voted 4-3
to leave interest rates at the record low of 1.25 percent.
September industrial data showed that Czech manufacturing's
fall was slowing. []
MORE TO CUT
In Hungary, lower-than-expected October inflation signalled
space for more monetary easing, giving a bit of boost to the
forint and local bonds as well, dealers said. []
Hungarian bond yields dropped 8-10 basis points with the
short end of the curve returning below 7 percent. Interest rate
swaps, meanwhile, shed nearly 20 basis points, a dealer said.
The main interest rate in Hungary stands at 7 percent, a
figure analysts said could reach 5.5 percent sometime next year.
Rate cut hopes along with the firming currency have buoyed
Hungarian debt after yields halved since March, although some
analysts say the yield drop has gone too far.
"The market has all but priced in a cut," a dealer said. "We
will consolidate slowly, the screen is all bids and I don't see
a major core market turn ahead to curb risk appetite."
Only Romania's leu <EURRON=> lagged, held back by political
uncertainty as Romania's new prime minister designate Liviu
Negoita moves to form a government that analysts give little
chance of winning parliamentary support.
Romania will force 1.3 million state employees to take 8
days unpaid holiday at the end of 2009 as part of efforts to
meet International Monetary Fund spending goals. []
The leu hovered on the strong side of 4.30 per euro where it
has clung to through the month-long political haggling.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.405 25.493 +0.35% +5.31%
Polish zloty <EURPLN=> 4.121 4.177 +1.36% -0.15%
Hungarian forint <EURHUF=> 269.27 271.02 +0.65% -2.12%
Croatian kuna <EURHRK=> 7.279 7.274 -0.07% +1.18%
Romanian leu <EURRON=> 4.293 4.291 -0.05% -6.49%
Serbian dinar <EURRSD=> 94.16 93.09 -1.14% -4.97%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -3 basis points to +96bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +111bps over bmk*
10-yr T-bond CZ10YT=RR -7 basis points to +94bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +511bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +450bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +396bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1531 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Mike Peacock/Victoria Main/Andy Bruce)
