(Corrects title of Czech central banker Hampl to vice-governor
in paragraph 13)
* PLN at 6-wk highs,HUF around 11-mth highs on rising euro
* Polish bonds weaker on c.banker's hawkish comments
* Romania's leu flat but output data supportive for unit
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, April 8 (Reuters) - Emerging Europe's currencies
were mostly higher on Friday, buoyed by a firmer euro following
the European Central Bank's decision to raise borrowing costs
and the possibility of further hikes ahead for the euro zone.
"Global sentiment is favourable. The dollar has weakened
against the euro, which means investors want to buy everything
(in higher-risk markets) including the forint," one
Budapest-based dealer said.
Hungary's forint <EURHUF=> still hovered around 11-month
highs to the euro -- the region's main reference currency --
after shrugging off a rise in the country's budget deficit that
breached the full-year target in March. []
By 0853 GMT the forint had firmed 0.2 percent to trade at
263.6.
The zloty <EURPLN=> reached 6-week highs, gaining 0.4
percent versus the common currency. Dealers say 3.95 is a key
level for the Polish currency and breaching it could open the
door to strengthening to around 3.93 against the euro.
A Reuters poll on Thursday showed the zloty is expected to
outperform the region over the next 12 months, rising by some 5
percent mainly on the back of expected further monetary policy
tightening. []
Poland's central bank raised its key rate by a quarter of a
percentage point to 4.0 percent on Tuesday, the second such
increase in a tightening cycle that began in January.
The market expects the bank to tighten policy further this
year as inflation accelerates.
ANOTHER HIKE?
A member of the Polish MPC, Andrzej Kazmierczak, told news
agency Bloomberg that the council may consider more decisive
interest rate rises if inflation tops 4 percent, especially if
consumer price expectations are not tamed. []
Fixed income dealers in Poland said the policymaker's
comments weakened Polish bonds, with yields rising some 1-3
basis points across the curve.
"The inflation reading for March is likely to be the key in
terms of the interest rate outlook," said Marek Kaczor, dealer
at PKO BP. "If it really tops 4 percent, the market will expect
another increase."
The consumer price index remained flat at 3.6 percent on an
annual basis in February, but households' expectations for
inflation over the next 12 months rose to 4.6 percent in March,
fuelling a view that more rate increases lie ahead.
By contrast, Czech central bank Vice-Governor Mojmir Hampl
said on Thursday demand pressures there remain subdued and
somewhat weaker than the bank had previously anticipated.
[]
The Czech central bank voted 5-1 to keep the main repo rate
at a record low of 0.75 percent in March and it is expected to
hold fire until the end of this year.
Czech data showed the unemployment rate dipped to 9.2
percent last month, more than a forecast of 9.4 percent.
[]
The crown <EURCZK=> rose 0.1 percent to the euro on Friday,
while Romania's leu <EURRON=> was virtually flat after
industrial output data showed a rise of 12.7 percent on an
annual basis in February. []
"This figure is supportive for our expectations regarding
(Romanian) growth. We forecast GDP growth of 0.3 percent
quarter-on-quarter in January-March," said Nicolaie
Alexandru-Chidesciuc of ING Bank.
Stocks across the region were almost flat, with Warsaw's
WIG20 edging up some 0.1 percent and Budapest's BUX falling some
0.4 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.402 24.421 +0.08% +2.45%
Polish zloty <EURPLN=> 3.958 3.973 +0.38% 0%
Hungarian forint <EURHUF=> 264.2 264.77 +0.22% +5.22%
Croatian kuna <EURHRK=> 7.365 7.369 +0.05% +0.2%
Romanian leu <EURRON=> 4.116 4.115 -0.02% +2.84%
Serbian dinar <EURRSD=> 101.617 101.8 +0.18% +4.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to -13bps over bmk*
7-yr T-bond CZ7YT=RR -6 basis points to +45bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +58bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +315bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +296bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +269bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1053 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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Official rates [] Emerging Diary []
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; Editing by Toby Chopra)
