* Poland's Skrzypek says FX not in line with fundamentals
* Leu steady as inflation points to rate cuts
* Yields down after Polish 2-yr bond tender
* Romania 5-yr Eurobond seen at "high 200s" over mid-swaps
(Updates throughout)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, March 10 (Reuters) - The Polish zloty
retreated slightly from multi-month peaks on Wednesday as the
central bank governor tried to talk down the currency, while
Romania's leu held steady after data pointed to further rate
cuts.
Central and eastern European currencies have rallied in the
past month, but have been hit by some profit-taking this week.
Dealers said the region's improved economic outlook left room
for more gains, although further strength could impede the
recovery. []
Poland's central bank governor Slawomir Skrzypek said on
Wednesday that fundamentals did not justify the current state of
the currency markets. The zloty fell to 3.874 per euro at 1448
GMT from 3.8608 ahead of the comments, underperforming peers.
He signalled a more dovish stance compared with
zloty-strengthening statements last week when he envisioned rate
hikes []. His latest comments echo those of two
members of his rate-setting team who fretted over the zloty's
sharp rise on Tuesday. [].
"Skrzypek's comments weakened the zloty," said one
Warsaw-based dealer.
In Romania, where interest rate cuts remain on the agenda,
data showed inflation fell below market expectations in
February. []
"The leu is unlikely to be affected by this as the improved
political situation and the ... IMF aid are still dominating,"
Commerzbank said in a daily note, adding it saw a 50 basis point
cut at the March meeting.
The leu <EURRON=> bid a touch up at 4.091 to the euro.
In February the International Monetary Fund freed up $3.32
billion from Romania's revived 20 billion euro aid package after
a new government passed a 2010 austerity budget, which also led
to improved outlooks from ratings agencies. []
In Hungary, where analysts said there was room to ease
monetary policy, markets were looking to Thursday's release of
February inflation data after an upside surprise in January.
The forint <EURHUF=> was flat against the euro, while the
Czech crown <EURCZK=> was up 0.3 percent ahead of final GDP data
scheduled for Thursday.
HIGH BOND DEMAND
Yields of two-year bonds fell 6 basis points after Poland's
2012 bond tender was three times subscribed. [].
Other benchmark bond yields also fell, although slightly less
than the shorter-end of the curve.
The country priced a 4-year Swiss franc bond worth 475
million francs at 88 basis points above mid-swaps on Tuesday.
The issue met with strong demand as investors continue to seek
out emerging market sovereign debt. []
Hungarian yields fell 3-6 basis points.
Romania was on a roadshow for its planned 5-year Eurobond
issue which ends on March 11 and early market talk was putting
the price in the "high 200s" over mid-swaps [].
"There are managers out there looking for sovereign paper
denominated in euros that they can buy to be underweight the
euro zone peripherals without having to go into Bunds," one fund
manager said.
Investors have been upbeat on regional bonds lately, as much
of central and eastern Europe looks in a better debt position
than some countries at the euro zone's periphery, such as
Greece.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.564 25.632 +0.27% +2.95%
Polish zloty <EURPLN=> 3.874 3.867 -0.18% +5.94%
Hungarian forint <EURHUF=> 266.5 266.53 +0.01% +1.44%
Croatian kuna <EURHRK=> 7.262 7.262 0% +0.65%
Romanian leu <EURRON=> 4.091 4.094 +0.07% +3.58%
Serbian dinar <EURRSD=> 99.73 99.657 -0.07% -3.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to 84bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +116bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +95bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -9 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +318bps over bmk*
10-yr T-bond PL10YT=RR -7 basis points to +270bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +511bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +454bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +414bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1648 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Marius Zaharia, editing by John Stonestreet)
