* Forint breaks 290 level, leads rally with zloty
* Czech crown holds previous gains
* Czech's Fischer appointed as interim PM
* Hungary cbanker expects deeper recession
* Romania Jan-Feb trade gap shrinks, Czech CPI above fcast
(Updates throughout, changes prices)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, April 9 (Reuters) - Hungary's forint broke
a key level to lead regional gains together with the Polish
zloty on Thursday, in a rally defied by the Czech crown as the
end of a political crisis caught it already stronger than its
peers.
A zloty level around a quote of 4.376 per euro <EURPLN=> at
1441 GMT, was an attractive level to enter ERM-2, a central
banker said. []
Poland plans to join the mechanism in the first half of this
year, but lately some government officials signalled some
slippage is likely.
The forint firmed early on despite central bank deputy
governor Julia Kiraly saying the economy could sink into a much
deeper recession than earlier believed. []
Dealers said the forint outperformed most of its peers as
its firming on the back of an improvement in risk appetite
accelerated near key stop-loss levels at 290 against the euro,
which were hit already in overnight trade.
"This is a general risk rally," one trader said. "In the
morning the forint was bought by many players on the dip and
later in intra-day trade those who were sitting in (euro) long
positions joined the (euro) sellers, seeing that the forint was
unwilling to ease."
The forint <EURHUF=> firmed by 1.5 percent, as much as the
Polish zloty <EURPLN=>, which was still benefiting from the
success of a well-bid debt auction on Wednesday. []
The Romanian leu <EURRON=> also firmed 0.8 percent, keeping
up with its peers for the first time in months of rangebound
trading, as dealers suspected a major company sold euros to
increase its share capital.
In the Czech Republic, the president appointed an interim
prime minister on Thursday, effectively ending a political
crisis which had troubled the country for two weeks.
[]
However, the crown <EURCZK=> was little moved by the
appointment and also defied a pick up in inflation caused by
temporary factors, which did not change expectations of further
easing of interest rates. []
Dealers said the crown -- the only regional currency to gain
against the euro this year -- did not join the rally as a
compensation for not participating in past weakening trends.
"Most of the time when the region has been weakening in the
past two days, there was someone from Switzerland who sold some
300-400 million euros. All the bids were satisfied then by this
offer, hence the crown went up," a trader in Prague said.
Analysts said although weakening pressure from the global
financial crisis would persist in the longer run, currencies
could extend gains until Easter.
"I think currencies will appreciate moderately at least in
the next two days, as investors are not keen to open new
positions before the holiday, but trade is likely to be
volatile," said Ulrich Leuchtmann, analyst at Commerzbank.
Consensus forecasts in a Reuters poll last week showed the
region's currencies could firm in 6-12 months after weakening in
the next few months due to the crisis. []
Bonds market in Poland and Hungary benefited from
Wednesday's tenders with yields falling along the curve and
dealers said a general rally is likely to continue.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.45 26.502 +0.2% +1.15%
Polish zloty <EURPLN=> 4.376 4.444 +1.55% -5.96%
Hungarian forint <EURHUF=> 288.65 293.02 +1.51% -8.7%
Croatian kuna <EURHRK=> 7.385 7.396 +0.15% -0.27%
Romanian leu <EURRON=> 4.129 4.163 +0.82% -2.78%
Serbian dinar <EURRSD=> 93.872 93.08 -0.84% -4.68%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -22 basis points to 168bps over bmk*
4-yr T-bond CZ4YT=RR +1 basis points to +224bps over bmk*
8-yr T-bond CZ8YT=RR -22 basis points to +277bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +392bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +282bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +860bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +784bps over bmk*
10-yr T-bond HU10YT=RR +15 basis points to +667bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1741 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz/Marius Zaharia, Editing by Jason Neely)
