* Czech cbank holds fire, crown unfazed
* Romania rejects all bids at 3-yr bond auction
* Zloty seen outperforming region on 12-month horizon
(Updates with Czech c.bank comments, Romania auction)
By Marius Zaharia and Marcin Goettig
BUCHAREST/WARSAW, Aug 5 (Reuters) - The Czech crown weakened
slightly on Thursday, but remained near 21-month highs after the
central bank kept rates flat, while the Romanian leu was little
changed after the country rejected all bids at a bond auction.
The Czech central bank left interest rates unchanged at an
all-time low of 0.75 percent as a strong crown and a slow
economic recovery is keeping inflation in check. []
Central bank Governor Miroslav Singer said it would be no
"big drama" if the crown stayed around current levels, but he
warned that further quick strengthening could change the
inflation outlook and force the bank to react. []
"The crown was unmoved, because the market expected stronger
signals from the central bank, perhaps talk of another cut,"
said a Warsaw-based dealer.
The Czech crown hit a 21-month high against the euro at the
end of July. Since then it has remained in a range of 24.5-24.8
per euro.
Policymakers have verbally intervened to weaken the Czech
unit in the past when it has neared 25 per euro, fearing its
strength would hit exports and endanger economic recovery.
A Reuters poll on Thursday forecast the crown has no more
room to rise over a 12-month horizon while the Polish zloty is
seen outperforming in that period. []
Elsewhere, The European Central Bank kept rates unchanged as
expected on Thursday, and dealers said the bank's decision had a
limited impact on the region.
By 1421 GMT the crown <EURCZK=> was 0.2 percent weaker at
24.675 to the euro.
Other currencies were mixed, with the zloty <EURPLN=> almost
flat and the Hungarian forint <EURHUF=> some 0.5 percent
stronger against the common currency.
BIDS REJECTED
The Romanian leu <EURRON=> shrugged off the fact that the
finance ministry rejected all bids at Thursday's three-year bond
auction, once again resisting paying yields above 7 percent.
Three-year paper was quoted at 7.2 percent on Romania's
dormant secondary market. []
Romania's central bank left interest rates unchanged at 6.25
percent on Wednesday after the country got the green light for
the next tranche of International Monetary Fund and EU aid.
[]
Some economists say this bodes well for a recovery in the
leu, but the outlook remains uncertain as recent austerity
measures may deepen recession.
Polish bonds were stronger, particularly the longer-end of
the curve, after a successful auction on Wednesday, while
Hungarian papers were mixed, with short-dated paper yields down
some 9 basis points and longer bonds up some 3 basis points.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.675 24.626 -0.2% +6.66%
Polish zloty <EURPLN=> 3.984 3.985 +0.03% +3.01%
Hungarian forint <EURHUF=> 279.5 280.97 +0.53% -3.27%
Croatian kuna <EURHRK=> 7.221 7.221 0% +1.22%
Romanian leu <EURRON=> 4.253 4.251 -0.05% -0.37%
Serbian dinar <EURRSD=> 105.867 105.96 +0.09% -9.43%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 100bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +110bps over bmk*
10-yr T-bond CZ9YT=RR +11 basis points to +115bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +399bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +381bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +322bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +578bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +542bps over bmk*
10-yr T-bond HU10YT=RR +6 basis points to +482bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1621 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Patrick Graham and Susan Fenton)
