* FX recover, forint holds gains after rate cut
* Leu holds tight after first round of elections
(Updates with Hungary cbank)
By Dagmara Leszkowicz and Jason Hovet
WARSAW/PRAGUE, Nov 23 (Reuters) - Central European
currencies rebounded on Monday, while the Hungarian forint held
gains along with government bonds after the central bank as
expected cut interest rates a half percentage point.
Stock markets also gained as markets recovered from jitters
on Friday over Ukraine's debt, which knocked central European
assets and banks exposed there, while highlighting the fragility
of a half-year rally for emerging assets. []
In Romania, the leu was steady after the first round of a
presidential election on Sunday that saw incumbent Traian
Basescu take a slim lead, stuck within the range it has held
since a government collapse last month.
A second and final round of voting is scheduled for Dec. 6,
and the winner will likely pick the next prime minister, tasked
with getting Romania's IMF aid package back on track.
[]
The leu <EURRON=> held around 4.28 per euro, on the strong
side of the 4.3 per euro level that dealers have speculated the
central bank has aimed to protect with interventions.
The leu has lagged a currency rally this month, gaining 0.7
percent since Nov 1, while peers are up around 3 percent.
The forint <EURHUF=> bid up 0.3 percent at 267.5 to the euro
by 1342 GMT after the central bank cut rates to an almost 3-1/2
year low of 6.5 percent. []
Hungary has cut its base rate by a combined 300 basis points
over the past five months and most analysts expect the key rate
to find the floor at 5.5 percent by next summer, although
markets have started to question the speed of cuts.
"With many in the market now looking for a risk selloff into
year end and HUF possibly coming under some pressure, a pause
cannot be ruled out but we think on balance they will be able to
keep cutting to 5.50 percent in January," said Peter Attard
Montalto, emerging economist with Nomura.
RATE DIFFERENTIAL
Elsewhere, the Czech crown <EURCZK=> was up 0.2 percent at
25.825 and Poland's zloty <EURPLN=> rose 0.6 percent.
In Poland, the central bank meets on policy on Wednesday,
with analysts expecting its 10-strong council to leave rates
unchanged until at least mid-2010. Markets have also become more
certain the Czechs' monetary easing cycle has ended.
Polish and Czech bonds firmed on Monday with the recovery.
"The (Czech) bond market... still lacks strong stimuli these
days and yield curve volatility continues to be minimal as even
the short end does not follow bigger koruna's changes," CSOB
analysts said.
"It seems that the market has become quite sure that the CNB
will not change official rates for foreseeable future."
The Czech and Polish interest rates are at an all-time low
at 1.25 percent and 3.5 percent respectively.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.825 25.878 +0.21% +3.59%
Polish zloty <EURPLN=> 4.12 4.143 +0.56% -0.12%
Hungarian forint <EURHUF=> 267.5 268.35 +0.32% -1.48%
Croatian kuna <EURHRK=> 7.305 7.312 +0.1% +0.82%
Romanian leu <EURRON=> 4.279 4.279 0% -6.18%
Serbian dinar <EURRSD=> 94.36 94.34 -0.02% -5.17%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -12 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +111bps over bmk*
10-yr T-bond CZ10YT=RR -9 basis points to +93bps over bmk*
All data taken from Reuters at 1444 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz/Jason Hovet; Editing by Patrick Graham)
((dagmara.leszkowicz@thomsonreuters.com, RM:
dagmara.leszkowicz.reuters.com@reuters.net, tel +48 22 653 9718))
