* Forint, zloty firm as risk appetite slightly improves
* Polish zloty unfazed by central bank minutes
* Leu hits 15-week low on fiscal policy doubts
* Hungarian govt bonds rebound after auctions
By Jason Hovet and Marcin Goettig
PRAGUE/WARSAW, Oct 21 (Reuters) - The Hungarian forint and
the Polish zloty firmed with the help of rising stocks on
Thursday but took no further boost from the Polish central
bank's minutes.
The Polish central bank again took a vote on whether to
raise rates by 50 basis points at its September sitting but the
proposal failed, minutes showed on Thursday. [] A
similar proposal failed in August.
Peter Attard Montalto, economist at Nomura, said the minutes
did not surprise in that they showed again that policy makers
remained split on several issues.
Analysts polled by Reuters expect the central bank to launch
a tightening cycle with a 25-basis-point hike by the end of the
year, but are split over the timing of the move. The bank will
decide on rates on Wednesday next week.
Poland's zloty <EURPLN=> traded at 3.949 per euro at 1420
GMT, 0.3 percent stronger than Wednesday's close.
The forint firmed 0.7 percent to 274.43 against the euro,
helped by a rise in stock markets despite concerns that the
Hungarian government's tax plans announced last week would bring
only a temporary solution to its fiscal problems.
Hungary's central bank is expected to keep its interest
rates on hold at a record low of 5.25 percent next Monday.
[]
Warsaw's main stock index WIG20 <> rose 1.5 percent,
the Hungarian benchmark BUX <> gained 0.2 percent and
western European stock markets also firmed.
The Czech crown <EURCZK=>, often seen as a safe haven trade
within the region, was a touch weaker.
Earlier it firmed after central bank Vice-Governor Mojmir
Hampl said he did not believe monetary policy conditions had
changed significantly since the bank decided at its Sep. 23 rate
meeting to leave rates on hold at record lows. []
The leu <EURRON=> lost 0.1 percent to bid at 4.312 to the
euro by 1420 GMT, hitting a new 15-week low for the third
consecutive day as uncertainty over the government's
IMF-mandated austerity drive weighed on the unit.
On Wednesday, parliament approved a proposal from the
leftist opposition to cut VAT for basic food products to 5
percent from 24 percent, a move that could complicate a visiting
IMF team's review of the country's 20-billion-euro bailout.
Government officials said the VAT cut was not supported by
the ruling coalition and some deputies had backed it by mistake.
The governing Democrat Liberal party would try and prevent its
passage into law or have it revoked. []
HUNGARIAN BONDS FIRM
Hungarian government bonds firmed slightly after the
auctions where the government sold more bonds than planned
<HUAUCTION02>[].
"Sentiment is cautiously optimistic in the aftermath of the
auctions," one Budapest-based fixed income trader said.
"We haven't seen the (draft) 2011 budget yet which provide
important further information ... Rating agencies will also wait
for the budget before forming an opinion," the trader added.
Romania surprised by selling 200 million lei ($65 million)
in 5-year bonds, more than expected, at its self-imposed yield
cap of 7 percent, below secondary market levels at 7.2-7.3
percent. []
"We are probably talking about a bank that has revised its
portfolio targets and needed the paper," said Rozalia Pal, chief
economist at Unicredit Tiriac Bank in Bucharest. "Otherwise, the
market is still not down to 7 percent."
Poland sold 593 million zlotys ($209 million) worth of
floating-rate bonds maturing in 2021 and 120 million zlotys in
CPI-linked papers maturing in 2023 at a switch
tender.[]
Polish bond yields were little changed on Thursday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.57 24.511 -0.24 +7.11%
Polish zloty <EURPLN=> 3.949 3.959 +.25% +3.93%
Hungarian forint <EURHUF=> 274.43 276.23 +0.66% -1.49%
Croatian kuna <EURHRK=> 7.339 7.33 -0.12% -0.41%
Romanian leu <EURRON=> 4.312 4.307 -0.12% -1.73%
Serbian dinar <EURRSD=> 106.123 106 -0.12 -9.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 77bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +75bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +97bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +375bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +352bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +310bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +535bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +515bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +453bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at hh01 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
Marcin Goettig; Editing by John Stonestreet/Susan Fenton/Ruth
Pitchford)
