* Fed's stance draws flows to high-yielding forint
* Hungarian bond prices rise, tracking jump in forint
* Zloty gives up earlier gains but close to 2-mo high vs EUR
By Marcin Goettig
WARSAW, April 28 (Reuters) - Hungary's forint neared a
1-year high on Thursday after the Fed's reiteration of its
ultra-dovish stance drove the euro higher against the dollar and
boosted appetite for higher yielding assets.
But the Polish zloty failed to follow suit, as importers
took advantage of a surge to a 30-month high against the dollar
to buy the U.S. currency and sparked a wider bout of profit
taking.
The Federal Reserve's policy committee decided to keep rates
on hold near zero on Wednesday and stuck to its plans to
maintain its $600 billion bond buying programme through June.
The move indicated the market would be flush with cheap
liquidity for some time to come. It lifted stocks globally, hit
U.S. debt, and drove the dollar to a 17-month low versus the
euro. []
At 1142 GMT the forint <EURHUF=> had gained 0.3 percent to
263.75 against the euro, reaching a 3-week high versus the euro
and a 16 month high versus the dollar.
"Basically, the forint is tracking the euro/dollar. 263 has
been a fairly strong support for the EUR/HUF, but if the
euro/dollar breaks 1.50 then the forint can firm past it," a
Budapest-based dealer said.
A potential break of the 263 level would mean hitting a
1-year high versus the euro for the forint.
The Hungarian currency shrugged off data showing the
three-month rolling unemployment rate <HUU3MQ=ECI> had risen to
11.6 percent in January-March. The stronger currency lifted
Hungarian bonds, sending yields down by up to 5 basis points.
"Yields dropped because of the strength of the forint.
People in London are already preparing for their long holiday,
and without them I do not think that any big change could happen
in the next days," a Budapest-based fixed income trader said.
On Friday and Monday London's financial markets -- home to
many of the biggest offshore investors in emerging Europe --
are closed due to the royal wedding and a bank holiday.
Hungary sold 60.00 billion forints ($336 million) worth of
treasury bills at the Thursday tender. []
ZLOTY HELD BACK
The Polish zloty shed 0.1 percent, reversing earlier gains
as investors rushed to buy relatively cheap dollars.
As the euro is the region's main reference currency, a rise
in demand for dollars translates into higher demand for euros as
well.
But the zloty remained close to the two-month high hit on
Wednesday after the Finance Ministry said it would start
exchanging European Union funds on the spot market this quarter.
"Without the ministry actually selling euros on the market
it will be hard for the EUR/PLN to reach levels below 3.90," ING
Bank Slaski said in morning note.
The region's other currencies were steady. The Czech crown,
often seen as a safe-haven bet, <EURCZK=> was flat. The Romanian
leu <EURRON=> weakend by some 0.15 percent.
Polish and Czech bond yields were little changed.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.084 24.083 0% +3.8%
Polish zloty <EURPLN=> 3.935 3.932 -0.08% +0.58%
Hungarian forint <EURHUF=> 263.75 264.56 +0.31% +5.4%
Croatian kuna <EURHRK=> 7.353 7.354 +0.01% +0.37%
Romanian leu <EURRON=> 4.073 4.067 -0.15% +3.93%
Serbian dinar <EURRSD=> 99.71 100.6 +0.89% +6.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to -15bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +41bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +63bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +311bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +306bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +285bps over bmk*
The P
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +435bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +408bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +373bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1142 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marcin Goettig,
Editing by Toby Chopra)
