* Forint gains on PLN/HUF profit-taking
* Polish CPI in line with fcast, cements view of rate hike
* Crown at late-2008 high, dampens Czech rate outlook
* Poland tapping euro bond issue, to price this week
(Recasts, updates with Polish data)
By Jason Hovet
PRAGUE, Jan 13 (Reuters) - The Hungarian forint rose on
Thursday, gaining at the zloty's expense as investors took
profit on the currency pair after a sharp rise in the Polish
unit on expectations of an interest rate hike.
After comments from a number of policymakers, a Reuters poll
this week showed 17 of 29 analysts expect a Polish rate hike
next Wednesday, a shift from earlier this month, when only two
of 21 analysts polled forecast a January rise. []
The zloty has shot to a nine-month high in response, also
boosting regional peers, while improving economic data has
helped lifted currencies 1 and 3 percent higher in 2011.
The zloty <EURPLN=> retreated 0.8 percent to 3.87 to the
euro by 1050 GMT. The Hungarian forint <EURHUF=> gained 0.2
percent, breaking the 275 per euro level that has provided
resistance in previous sessions.
The zloty/forint cross <PLNHUF=R> was quoted at 71.03 on
Thursday after a Wednesday high of 72.229.
"The forint may outperform now because the zloty might have
been slightly overbought yesterday," a Budapest FX dealer said.
"My feeling is that the main cause is that more money flowed
into Hungarian government bonds (at auctions) today than
expected."
Hungary's debt agency sold 55 billion forints -- 10 billion
more than planned -- in bonds in three different maturities,
with the yield on the five-year bond down and tracking a drop in
yields in secondary markets. [] <HUISSUE>
Poland was in debt markets with a tap of its 4 percent,
March 2021 euro-denominated bond <0#PL054388209=>. Guidance was
at 150 basis points above mid-swaps, above the 120 basis points
priced when the bond was issued in September. []
Analysts said the forint's rise may be short-lived. "We
would be cautious to ride on a short EUR/HUF strategy and would
rather see the dips as a (euro) buying opportunity," 4Cast said.
The zloty also weakened a touch after data showed the
current account deficit widened more than expected.
Separately, Polish inflation <ECONPL> accelerated in
December, data showed on Thursday, in line with a 3.1 percent
forecast. The figure cemented most expectations that policy
tightening would start now. []
BREAKING LEVELS
The Polish currency firmed past 3.85 this week -- the level
at which the central bank intervened at last April for the first
time since introducing a free float in 2000.
The Czech crown <EURCZK=> dipped 0.2 percent to 24.36 per
euro, off a more-than two-year high hit late in Wednesday's
session. The Romanian leu <EURRON=> dipped the same amount.
Stocks in the region recovered early losses to trade flat.
A Polish rate rise would follow Hungary, which has raised
rates by 50 basis points in two moves since November. Hungarian
central bank minutes on Wednesday showed divisions and increased
uncertainty about a decision later this month. []
Czech forward markets price in a rate hike in six months.
Central bank board member Pavel Rezabek said on Wednesday a
rise in Czech inflation at the end of 2010 may prompt the
central bank to hike borrowing costs sooner than late-2011, as
the bank's forecast suggests. []
Short-dated interest rate swaps rose on the comments.
Komercni Banka, which this week recommended receiving a
two-year Czech interest rate swap <CZKAM6PR2Y=> against paying
six-month PRIBOR <CZK6MD=>, said in a daily trading note that
expectations still looked excessive. []
"With the crown the strongest since late 2008, it seems to
be pretty much unrealistic to expect a rate hike now," it said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.36 24.318 -0.17% +2.63%
Polish zloty <EURPLN=> 3.87 3.838 -0.83% +2.27%
Hungarian forint <EURHUF=> 274.7 275.33 +0.23% +1.19%
Croatian kuna <EURHRK=> 7.395 7.398 +0.04% -0.2%
Romanian leu <EURRON=> 4.26 4.251 -0.21% -0.63%
Serbian dinar <EURRSD=> 105.74 105.32 -0.4% +0.18%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -10 basis points to 68bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +81bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +95bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -13 basis points to +620bps over bmk*
5-yr T-bond HU5YT=RR -13 basis points to +569bps over bmk*
10-yr T-bond HU10YT=RR -9 basis points to +476bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1503 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Catherine Evans)
