* Libya tensions weigh on CEE currencies
* Polish zloty, Hungarian forint lead losses
* Hungarian bond yields up
(Recasts, adds comments, bond yields)
By Radu Marinas
BUCHAREST, Feb 22 (Reuters) - Central European currencies
slipped on Tuesday on reduced risk appetite as tension escalated
in Libya, with the Polish zloty also hit by dovish comments from
a central bank policymaker.
The euro fell as the dollar rallied broadly after growing
political tension in major oil exporter Libya prompted selling
in higher-yielding assets for the safety of the U.S. currency.
[]
By 1050 GMT the Polish zloty was down 0.4 percent from
Monday and the Hungarian forint <EURHUF=> was about 0.5 percent
weaker but had recovered some ground lost earlier in the
session. The Romanian leu and the Czech crown <EURCZK=> were
both about 0.1 percent weaker.
"There are a few reasons (for regional weakening), Libya
turmoil first," said Krzysztof Izdebski, bond trader at PKO BP.
The zloty <EURPLN=> was also hit after Polish central bank
Monetary Policy Council (MPC) member Adam Glapinski was quoted
as saying there were currently no grounds for another interest
rate raise. []
"We may see 4.0 levels on EURPLN. It seems we have a dovish
MPC which ignores inflation," said Jakub Wiraszka, dealer at BRE
Bank in Warsaw.
"Global sentiment is also poor, we have fears concerning
Libya, a lower outlook for Japan's rating, an earthquake in New
Zealand," he said.
Poland's central bank head Marek Belka said on Monday the
bank should act with moderation and that the January rate rise
would not be followed by a "cascade" of further hikes.
[]
In Hungary, bond yields rose 4-9 basis points on Middle East
worries and as market players are becoming nervous ahead of a
government package of fiscal reforms, due to be unveiled by
March 15.
"The yields rose because the international market sentiment
turned sour and the forint weakened to 273 (against the euro),"
one Budapest-based trader said.
"The current (forint) level may act as a support, but if
broken the key 275.00 level could come into the picture, which
may be followed by 278.00 and 280.00 shortly if capital flows
remain unsupportive for a longer period," KBC said in a note.
According to unconfirmed media reports Budapest in its
reform package could target savings of about 2.5 percent of GDP
by 2013. Uncertainty about what the government will announce,
and the possibility the package will not be as far-reaching as
hoped, is putting markets on edge.
Hungary's central bank kept interest rates unchanged at 6
percent at a meeting on Monday, as expected before four new
members join the Monetary Council and pausing after a string of
three-quarter point rate rises. []
In Romania, dealers said the leu <EURRON=> retreated after a
suspected covert intervention by the central bank pushed the
currency to a five-month high on Monday.
The intervention, which dealers said appeared to have been
the first this year, had briefly helped the leu buck the slide
in emerging European currencies.
The Czech crown was seen staying weak.
"We believe the Czech crown should stay in defensive mode on
global tensions with the nearest short term target at 24.71
EUR/CZK," KBC said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.488 24.464 -0.1% +2.09%
Polish zloty <EURPLN=> 3.958 3.941 -0.43% 0%
Hungarian forint <EURHUF=> 272.44 271.1 -0.49% +2.03%
Croatian kuna <EURHRK=> 7.405 7.385 -0.27% -0.34%
Romanian leu <EURRON=> 4.233 4.228 -0.12% 0%
Serbian dinar <EURRSD=> 103.05 103.01 -0.04% +2.79%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 37bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +89bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -7 basis points to +319bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +297bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +273bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +711 basis points to +527bps over bmk*
5-yr T-bond HU5YT=RR +734 basis points to +491bps over bmk*
10-yr T-bond HU10YT=RR +760 basis points to +438bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1145 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaus; Writing by Radu Marinas; Editing
by ...)
