* Crown leads gains, GDP and C/A surprise on upside
* Zloty seen stronger despite recent verbal intervention
* Romanian data would support more rate cuts - analyst
* Risk appetite supports currencies regionwide, bonds mixed
(Adds bonds, Czech C/A, Romania output, updates market)
By Marton Dunai
BUDAPEST, March 12 (Reuters) - East European currencies were
stronger on Friday on further signs of a local economic recovery
and rising risk appetite as investors shrugged off a recent
stream of verbal intervention from local policymakers.
Polish and Romanian leaders have voiced concerns that rapid
recent appreciation of their currencies might stifle growth, but
their comments have had little impact so far.
By 1047 GMT, the Polish zloty <EURPLN=> added a quarter of 1
percent, while the Czech crown <EURCZK=> traded at its highest
since November, gaining 0.2 percent.
The Hungarian forint <EURHUF=> added 0.2 percent and the leu
<EURRON=> edged up 0.1 percent.
The Czech current account showed a surprise surplus on
Friday, the second positive surprise in as many days after
fourth-quarter GDP was revised sharply upwards on Thursday.
[]
"This can stabilise the crown exchange rate," said David
Marek, chief economist at Patria Finance in Prague. "The Czech
Republic ranks among the stabilised economies thanks to the
current account and we are not threatened by any source of an
elevated instability in financial markets." []
In Poland, one of Europe's most resilient economies,
investors were buying the zloty again after a spate of verbal
intervention knocked the currency off 15-month highs earlier in
the week.
"The recent zloty weakening might be an occasion to enter
more long positions in the Polish currency. We think that both
flow as well fundamental factors will support strengthening of
the zloty in the medium term," BRE Bank said in a morning note.
"It will be challenging to keep EUR/PLN above the 3.85
level," UniCredit said in a note.
Hungary, which faces elections next month, continues to have
room for one more rate cut in March as the inflation environment
remains benign, the forint is strong and the country struggles
to return to growth, a rate-setter told Reuters on Thursday.
[]
Romania's economy showed faint signs of recovery in January,
including a narrowing trade deficit and modest growth in
industrial output, and analysts said there was room for further
interest rate cuts. []
"Data would justify a stronger leu, but the central bank
will likely oppose that," said Nicolae Alexandru Chidesciuc,
chief economist at ING Bank in Bucharest.
BONDS MIXED
Hungarian bonds rallied on rate cut expectations as well as
healthy global risk appetite, dealers in Budapest said.
The market has priced in further rate cuts totalling 50
basis points for March and April, which could come in one step
in March or in two steps, after which the bank is likely to
pause, one dealer said. In a Reuters poll last month most
analysts projected only one 25 basis point cut. <HUREPO1>
"I expect there will be a further steepening of the curve,
with the front end coming down sharply in both bonds and the
IRS," the dealer said.
Polish bonds were flat.
Romania attracted hefty demand for a five-year Eurobond sale
on Thursday, selling 1 billion euros in its first outing onto
the market since the financial crisis, which dealers said sent a
positive signal to markets. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.445 25.499 +0.21% +3.43%
Polish zloty <EURPLN=> 3.891 3.902 +0.28% +5.47%
Hungarian forint <EURHUF=> 266.04 266.43 +0.15% +1.62%
Croatian kuna <EURHRK=> 7.263 7.263 0% +0.64%
Romanian leu <EURRON=> 4.09 4.094 +0.1% +3.6%
Serbian dinar <EURRSD=> 99.807 99.84 +0.03% -3.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to +79bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +114bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +98bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +312bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +262bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +489bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +429bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +405bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1147 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Marton Dunai;
Editing by Susan Fenton)
