PRAGUE, April 11 (Reuters) - The Czech crown and Romanian
leu firmed a touch on Monday after inflation data, but emerging
European currencies were largely steady in early trade after
recent gains.
Hungary's forint, Poland's zloty and the leu have gained 2-4
percent since the middle of March thanks to a better economic
outlook or plans for fiscal reform, and in the zloty's case
expectations of rising interest rates.
Markets are watching inflation data due out this week after
the first rise in euro zone interest rates since the financial
crisis cut some of their rate premium.
Czech consumer prices rose a bit less than expected last
month but domestic demand stays weak.
Despite this, many analysts are still counting on a first
interest rate rise by the midpoint of the year, and markets have
also priced this scenario. []
Analysts have revised their earlier expectations of rate
cuts in Romania and now expect the bank to keep rates unchanged
at a record low of 6.25 percent until the end of the year.
The more hawkish rate view was supported by Monday's data
showing Romanian annual inflation accelerated to 8 percent in
March from February's 7.6 percent, above market expectations.
[]
The Czech crown, whose lower interest rates have held it
back against higher-yielding peers in the region, edged up 0.2
percent to the strong side of the 24.400 per euro level it has
hung around this month.
By 0810 GMT, the leu <EURRON=> rose 0.1 percent over Friday,
bidding at 4.104 to the euro. The forint, after scaling 11-month
highs in the last week, fell 0.3 percent to 264.11 and the zloty
<EURPLN=> was flat.
"There is no real upside for the forint, so we're looking
further down the road," a Budapest dealer said.
"Inflation data due out on Tuesday and especially the
convergence report at the end of the week will have a bit more
of an impact. No upside expected there either, but a negative
surprise might hit Hungary's assets."
Dealers said the Czech and Romanian data had no immediate
impact as markets were waiting on further clues.
Stocks were mixed and central Europe's reference currency,
the euro, dipped. Commerzbank bank said rising inflation would
keep central European currencies on their strong run.
"Markets will watch out very carefully for the smallest
signs of rising inflation rates as this would fuel speculation
that the Eastern European central banks might raise rates
earlier or more notably than expected," it said.
"Risk appetite for emerging markets is quite high anyway and
as a result it would be easy to find sufficient numbers of
market participants to join the rate speculation band wagon."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.384 24.435 +0.21% +2.53%
Polish zloty <EURPLN=> 3.963 3.962 -0.03% -0.13%
Hungarian forint <EURHUF=> 264.11 263.35 -0.29% +5.25%
Croatian kuna <EURHRK=> 7.363 7.344 -0.26% +0.23%
Romanian leu <EURRON=> 4.104 4.107 +0.07% +3.14%
Serbian dinar <EURRSD=> 100.84 101.34 +0.5% +5.04%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to -21bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +47bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +61bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1011 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 Ruth Pitchford)
