* Forint weaker before rate decision
* Market awaits Polish wage data
* Worries over possible Greek debt restructuring weigh
(Adds fixed income, detail)
By Dagmara Leszkowicz and maciej Onoszko
WARSAW, April 18 (Reuters) - Hungary's forint weakened
against the euro on Monday, extending recent losses ahead of a
rate decision that will likely keep borrowing costs unchanged
amid growing inflation pressure across the region.
Currencies have so far shrugged off negative news coming
from the heavily-indebted euro zone periphery nations, but
market participants say a possible restructuring of Greece's
debt would affect the CEE region.
A jump in Hungary's inflation to 4.5 percent year-on-year in
March has reinforced expectations the central bank will keep its
base interest rate <NBHI> unchanged at 6 percent.
The bank's decision will be published at 1200 GMT, followed
an hour later by a news conference with Governor Andras Simor.
"We do not expect any changes to the rate but it will be
quite interesting to see how the MPC reacts to the recent jump
in the CPI (and core)," BNP Paribas said in a note.
By 0855 GMT the forint <EURHUF=> traded at 266.7, down some
0.1 percent versus the euro.
Hungary's ruling party Fidesz will pass a new constitution
through parliament on Monday, despite a boycott from opposition
parties which say it lacks consensus and would cement the ruling
party's power beyond the end of its term. []
Earlier on Monday the country's Economy Ministry State
Secretary Gyorgy Naszvadi said Hungarian corporate and
value-added tax revenues may be lower than in government plans
in 2011 but the deficit goal remains attainable []
Fiscal policies across the region remain in focus, analysts
say, especially in Poland, where growing doubts over a
persistent failure to adopt rigorous fiscal reforms may shift
investor interest to Hungary. []
"Should the government push ahead with its consolidation
plans, the sovereign should over the coming quarters see
rating agencies shift from their negative outcome and eventually
reverse some of the downgrades that Hungary has undergone over
recent years," analysts at UniCredit wrote in a note.
KEY WAGE DATA
The Polish zloty <EURPLN=> edged down 0.1 percent as the
market awaited data on March wages due at 1200 GMT, which should
signal whether recent rises in consumer prices have started to
translate into wage increases.
"If last month's wages rose more slowly than expected by
analysts, the zloty could fall towards 3.97 against the euro, as
this scenario would decrease the chances for swift monetary
policy tightening," Bank BPH analysts wrote in their research.
Analysts have started to bet on a rate increase next month
as inflation in March accelerated to 4.3 percent, well above the
central bank's target of 2.5 percent +/- 1 percentage point.
But Governor Marek Belka squeezed some air out of the
expectations, saying the MPC should not base its decision on
monthly data.
MPC member Adam Glapinski echoed this view in an interview
for Bloomberg on Monday, saying the bank would make a serious
mistake by raising borrowing costs in May. []
Elsewhere, Romania's leu <EURRON=> firmed 0.1 percent to the
euro and the Czech crown <EURCZK=> gained 0.3 percent.
Government leaders in the Czech Republic meet on Monday to
debate the future of the centre-right government after a
corruption scandal brought it to the brink of collapse. Parties
pledged on Friday to keep their alliance but did not come up
with any specific plan.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.176 24.24 +0.26% +3.41%
Polish zloty <EURPLN=> 3.954 3.949 -0.13% +0.1%
Hungarian forint <EURHUF=> 266.7 266.5 -0.07% +4.23%
Croatian kuna <EURHRK=> 7.356 7.329 -0.37% +0.33%
Romanian leu <EURRON=> 4.086 4.09 +0.1% +3.6%
Serbian dinar <EURRSD=> 101.21 101.33 +0.12% +4.66%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +7 basis points to -9bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +48bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +64bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +321bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +311bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +279bps over bmk*
The P
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +449bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +423bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +379bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1055 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
Editing by Stephen Nisbet)
