(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Dec 11 (Reuters) - Hungary's forint gained on euro
gains against the dollar on Thursday, and some analysts said
traders were also playing it against the Polish zloty, which has
lost a quarter of its value to the euro since the end of July.
Dealers said much lower than expected Hungarian inflation
data on Thursday had not moved the forint significantly, while
the Romanian leu slid on persisting concerns over that country's
new coalition government.
"Because of the euro/dollar cross, the forint has moved up a
bit versus the euro, and there is also a recent play in effect
to bet on zloty weakening and a stronger forint," a
Budapest-based currency dealer said.
The euro hit a six-week high against the dollar on Thursday.
Often currencies in the region gain or lose against the euro
depending on how the single currency performs against the
greenback.
At 0944 GMT the forint <EURHUF=> was 0.3 percent up trading
at 263.54. The zloty <EURPLN=> dipped 0.6 percent to 3.98 to the
common currency.
Hungary's data showed consumer prices fell almost one
percentage point last month to 4.2 percent due to a sharp fall
in fuel prices. It is the lowest rate since August 2006 and
economists expect it to fall further. []
The zloty has extended losses this month on concerns the
corporate sector may have to write off millions of euros after
hedging contracts went the wrong way due to the unit's earlier
losses.
"The currency may weaken further as it is clear foreign
investors are continuing to sell," said one dealer at a
Warsaw-based bank.
Romania's leu <EURRON=> was down half a percentage point
after the nomination of liberal economist Theodor Stolojan to
head Romania's probable centre-left coalition government on
Wednesday. []
He has 10 days to put together a cabinet and governing
programme and ask parliament's approval, but investors are wary.
"People want to see measures. That's what markets are
looking for right now," said a dealer with a foreign bank in
Bucharest.
Another key driver for the leu was November inflation data,
which beat market expectations by slowing to 6.7 percent and
prompted market watchers to say a rate cut may be in the cards.
"We would not be surprised to see first rate cuts already at
the beginning of 2009, which is why we think that the official
rate will decline next year to 8.50," said Bartosz Pawlowski at
TD Securities in London.
The Czech crown <EURCZK=> also weakened against the euro.
Dealers said the currrency was still under pressure from
disappointing economic growth data on Wednesday.
On the bonds market the Polish papers weakened slightly, but
dealers said domestic investors were taking profit after recent
gains and the country's bonds were still very strong.
The Polish finance ministry also said it would offer
long-term bonds at a tender on December 17 after Wednesday's
2-year paper auction showed market conditions were favourable.
[].
In Hungary, bond yields dropped 10-15 basis points along the
curve on the lower than expected inflation figure.
-----------------MARKET SNAPSHOT----------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.93 25.84 -0.35% +2.14%
Polish zloty <EURPLN=> 3.979 3.955 -0.61% -10.51%
Hungarian forint <EURHUF=> 263.54 264.25 +0.27% -4.23%
Croatian kuna <EURHRK=> 7.182 7.18 -0.03% +1.97%
Romanian leu <EURRON=> 3.908 3.89 -0.46% -9.16%
Serbian dinar <EURRSD=> 85.731 84 -2.06% -8.85%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +30 basis points to 170bps over bmk*
5-yr T-bond CZ5YT=RR +2 basis points to +136bps over bmk*
10-yr T-bond CZ9YT=RR -7 basis points to +111bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +340bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +297bps over bmk*
10-yr T-bond PL10YT=RR -9 basis points to +256bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -38 basis points to +722bps over bmk*
5-yr T-bond HU5YT=RR -49 basis points to +662bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +498bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0944 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaux, Writing by Dagmara
Leszkowicz)
