* Forint supported by rate comments
* Other FX little changed
* Bonds mostly weaker, Polish papers down ahead of auction
(Adds fixed income, detail)
WARSAW, March 8 (Reuters) - Central European currencies were
mixed on Tuesday, with the Hungarian forint rising after one of
Hungary's newly appointed central bankers said interest rates
should stay on hold for some time.
Hungary's ruling Fidesz party put two economists on the
country's Monetary Policy Council on Monday. The vast majority
of analysts had anticipated the government nominations would
give the council a looser policy bias. []
The comments by new central banker Ferenc Gerhardt stressed
the need to combat inflation, casting doubt on that assumption.
"The comments were clearly market friendly and based on
their background they sound reasonable," said Elisabeth Andrew,
FX analyst at Nordea. "But again, we must also have in mind that
we don't know yet how (the new appointees) actually will vote."
Two further appointments are pending.
Data released on Monday showed Hungary's budget deficit
surged to 81.4 percent of the full-year plan after February.
The economy ministry said the full-year target of 2.94
percent of gross domestic product (GDP) was still achievable as
proceeds from the sale of private pension assets and crisis
taxes would boost state coffers in the second half. But market
participants said the data could add to market pressure.
"None of this is verifiable until detailed figures are
released later in March," analysts at RBC wrote in a note.
"Nevertheless, these data could cause some nerves in the short
term."
In other data, Hungary's industrial output rose by a
higher-than-expected 13.6 percent in January, well above market
expectations. []
By 1007 GMT, the forint <EURHUF=> was 0.4 percent stronger
against the euro at 270.00.
The bond market was weaker across the region with Hungary's
bond yields rising some 7.9 basis points across the curve, while
Polish paper fell ahead of the 2-year bond auction on Wednesday.
The Polish finance ministry will offer up to 4.5 billion
zlotys of the paper, with results of the auction expected at
1100 GMT.
RATES VS GROWTH
The region's other currencies mostly hovered around their
previous closing levels, with the Czech crown <EURCZK=> and the
Polish zloty <EURPLN=> edging 0.1 percent lower against the
euro. Romania's leu <EURRON=> gained 0.2 percent.
In Poland, a member of the central bank's Monetary Policy
Council told daily Nasz Dziennik the MPC would hurt economic
growth and the labour market if it raised rates and would still
fail to curb externally driven inflation. []
Newly published voting records from the last four months of
2010 showed policymakers in Poland were split on whether to
increase rates. Central bank governor Marek Belka used his vote
to block motions for a rate hike each time.
Poland raised rates in January by 25 basis points after
Belka signalled concern over inflation.
Polish 9x12 forward rate agreements <PLFRA> indicate four
more interest rate increases are expected by the end of the
year, each by a quarter of a percentage point.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.187 24.171 -0.07% +3.36%
Polish zloty <EURPLN=> 3.974 3.971 -0.08% -0.4%
Hungarian forint <EURHUF=> 270.9 272 +0.41% +2.61%
Croatian kuna <EURHRK=> 7.401 7.405 +0.05% -0.28%
Romanian leu <EURRON=> 4.186 4.194 +0.19% +1.12%
Serbian dinar <EURRSD=> 103.57 103.32 -0.24% +2.28%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 12bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +72bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +80bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +336bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +332bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +302bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +8 basis points to +487bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +456bps over bmk*
10-yr T-bond HU10YT=RR +9 basis points to +409bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1107 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
Editing by Hugh Lawson)
