* Forint unmoved after decision to keep rates flat
* Zloty dips on dovish cbank comments
(Updates with Hugnary's decision)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Feb 21 (Reuters) - Hungary's forint broadly
shrugged off the central bank's decision to leave interest rate
unchanged at 6 percent on Monday in line with analysts'
expectations.
The decision followed three quarter-point increases since
November and is forecast to signal at very least a longer halt
in tightening, partially due to markets expectations that
appointments next month will give it a looser policy drift.
"That is no surprise to us -- or anybody else for that
matter," said Lars Christensen, economist at Danske Bank. "With
growth still lacklustre and inflation set to moderate there is
really no reason for hiking rates at the moment."
The forint <EURHUF=> fell some 0.5 percent to the euro, but
remained flat immediately after the rate decision, by 1324 GMT.
Governor Andras Simor was due to comment on the decision in a
news conference starting at 1400 GMT.
The Polish zloty <EURPLN=> dipped 0.3 percent to the euro on
comments of Poland's central bank governor that pointed to a
more moderate pace of its own monetary policy tightening.
Poland raised its main rate to 3.75 percent from a record
low last month. Markets have raised bets the Monetary Policy
Council will follow that with another swift hike at the
council's March meeting. []
But on Monday, the central bank's head Marek Belka said it
should act with moderation as long as there is no wage pressure
and the January rate rise would not be followed by a "cascade"
of further hikes. []
"We're less confident now with a possible rate hike in March
(after Belka's comments), but we also bear in mind that his
comments are more ambiguous recently," said Rafal Benecki,
senior economist at ING bank in Warsaw.
Other currencies were little changed, with the Czech crown
<EURCZK=> flat against the euro and the Romanian leu <EURRON=>
some 0.2 percent stronger.
Polish bonds shrugged off Belka's comments and bond yields
remained flat.
Polish 9x12 forward rate agreements <PLNFRA=> still prices
in four more interest rate increases this year, each by a
quarter of percentage point.
EXTERNAL FACTORS WEIGH
A dip in central Europe's reference currency, the euro, and
falling risk appetite amid spreading anti-government protests in
Libya and the Middle East also added pressure on emerging
European currencies.
Concerns over euro zone peripheral Portugal's high budget
deficit also weighed on the market, dealer said.
"These negative factors are more important than positive
news from US companies, which had increased risk appetite on
Friday in the evening," said Piotr Bujak of Bank Zachodni WBK.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.442 24.443 0% +2.28%
Polish zloty <EURPLN=> 3.925 3.915 -0.25% +0.84%
Hungarian forint <EURHUF=> 270.83 269.56 -0.47% +2.64%
Croatian kuna <EURHRK=> 7.405 7.405 0% -0.34%
Romanian leu <EURRON=> 4.231 4.24 +0.21% +0.05%
Serbian dinar <EURRSD=> 103.7 103.1 -0.58% +2.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 33bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +83bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +85bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +373bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +346bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +307bps over bmk*
The P
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +519bps over bmk*
5-yr T-bond HU5YT=RR +8 basis points to +484bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +430bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1424 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;
Editing by Toby Chopra)
