* Weaker Swissie helps forint, other FX mostly steady or up
* Bonds rally loses steam, Romania sticks to yield cap
* Anti-austerity protests planned in Bucharest, Prague
(Updates with Romania, Poland tenders, quote)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Sept 20 (Reuters) - The forint led gains
in central Europe on Monday, approaching a three-week high hit
at the end of last week with the help of a weak Swiss franc,
while Romania stuck to its yield cap for another debt auction.
Central European currencies have moved back to stronger
ground after some weakness in the past month and with a lack of
key data for now, dealers said technical levels have started
providing resistance to sharp moves.
Markets may be tested later this week by anti-austerity
protests in Bucharest and Prague, while Budapest starts talks
with unions on wage proposals. But analysts say the region's
governments are unlikely to be deterred from budget cutting.
The forint <EURHUF=> rose 0.5 percent to 280.74 to the euro
by 1350 GMT, near last week's highs of 280.37. The currency's 6
percent rise versus the franc <CHFHUF=> in the past two weeks
has translated into gains against the euro, its main reference.
Hundreds of thousands of Hungarian households that have
taken out foreign currency mortgages have had to make higher
payments due to a franc rally that drove the forint to record
lows against the Swiss currency this month.
"The weakness of the franc should ease pressure on the
forint," RBC Capital Markets wrote in a Monday report.
The Polish zloty <EURPLN=> added 0.3 percent, unaffected by
central bank governor Marek Belka's comments that a strong
currency rebound could cause problems [], while the
Czech crown <EURCZK=> was flat.
ROMANIA TENDER, PROTESTS
Romania's leu <EURRON=> edged down 0.3 percent, as the
finance ministry stuck to its tactic to cap yields at 7 percent,
selling a touch less than planned at a six-month bills auction.
[].
"Given that secondary market yields for six-month paper are
at around this level, it is surprising the ministry did not
borrow its entire planned amount," said one trader in Bucharest.
"This may suggest banks have filled the exposure limits on
Romanian debt."
The ministry has said Romania's secondary market is too
illiquid to stand as guidance for primary debt auctions.
Analysts say the ministry has painted itself into a corner
by refusing to sell bonds at yields higher than 7 percent and
faces a funding crunch in November when yields could jump by up
to 1 percentage point. []
Protests could also pose a particular challenge in Romania,
where unions are traditionally stronger than in other central
European states and the government is struggling to keep a 20
billion euro IMF aid deal on track.
Romania's parliament passed a pension reform bill last week
but the weakened government faces battles in passing other
bills, including a value-added tax hike.
Hungarian bond yields were a touch lower on Monday in thin
trade, but the stronger forint failed to lift government bonds
as it has had in the past, and dealers said a recent rally has
cooled ahead of Oct. 3 municipal elections.
Czech and Polish bond markets have also cooled after a
summer rally that sent yields to new lows thanks to falling
supply, improving fiscal outlooks and a rally in core markets.
A 52-week T-bills tender in Warsaw was successful, with the
average yield slightly lower as demand was almost six times
higher than the amount sold. []
The Czech benchmark 2019 bond <CZ1002471=> yield is up 10
basis points in the past two weeks after hitting a low of 3.15
percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.654 24.652 -0.01% +6.75%
Polish zloty <EURPLN=> 3.945 3.958 +0.33% +4.03%
Hungarian forint <EURHUF=> 280.74 282.06 +0.47% -3.7%
Croatian kuna <EURHRK=> 7.283 7.282 -0.01% +0.36%
Romanian leu <EURRON=> 4.264 4.252 -0.28% -0.62%
Serbian dinar <EURRSD=> 105.28 105.34 +0.06% -8.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +89bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +89bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +385bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +362bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +303bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +580bps over bmk*
5-yr T-bond HU5YT=RR -8 basis points to +538bps over bmk*
10-yr T-bond HU10YT=RR -7 basis points to +444bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1550 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Marius Zaharia; Editing by Ruth Pitchford, John Stonestreet)
