(Adds details, bond markets)
PRAGUE, Sept 22 (Reuters) - Poland's zloty edged higher on
Monday as U.S. plans to clean up bad mortgage debt boosted
global sentiment, helping central and eastern European
currencies gain traction against the euro.
The zloty <EURPLN=> gained 0.2 percent from Friday's
domestic close to trade at 3.287 per euro by 0812 GMT as the
market also awaited net inflation data. Analysts expect the
numbers, which strip out fuel and food prices, to show price
pressures still exist in the region's largest economy.
Hungary's forint <EURHUF=> was steady at 239.35 versus the
euro, and the Czech crown <EURCZK=> was a tad down at 24.02 from
23.98 to the euro.
High-yielding currencies like the zloty and forint got a
boost at the end of last week from growing risk appetite after
the United States started putting together plans to clear up
some of the bad debt that has clogged global credit markets.
However, dealers say there is still caution in the market as
details of the U.S. plans come to light, with investors keen to
keep exposure to swift moves minimal.
"CEE currencies should benefit from the plans," said one
Prague-based trader. "(But) people are trying to keep squared
(positions) on the market."
Regional bond markets were quiet, with dealers expecting
some pick-up as euro zone government debt markets inched higher.
"Polish bonds were stable early on Monday but we are likely
to gain later in the day, still on the back of output data as
well as improving market sentiment," said Maciej Slomka, chief
dealer at Pekao bank in Warsaw.
Weaker industrial output data last week cast doubts on the
extent to which Poland's central bank will further tighten
monetary policy.
However, analysts still expect an interest rate hike before
the end of the year to clamp down on inflation that is nearly
double the bank's target.
Other banks in the region are seen holding rates steady in
the coming months before easing policy, with the Czech central
bank cutting borrowing costs in August as concern grew over
growth in the face of weaker euro zone demand for exports.
In Poland, though, still high price growth and the country's
plan to push forward with preparations to adopt the euro may add
to the case for another rise in official interest rates.
Among other regional currencies, Romania's leu <EURRON=>
inched up 0.2 percent to 3.625 per euro on Monday.
The Serbian dinar <EURRSD=> rose 0.5 percent to 76.26
against the euro and Croatia's kuna <EURHRK=> edged 0.1 percent
lower to 7.11 per euro.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.020 23.980 -0.17% +9.35%
Polish zloty <EURPLN=> 3.287 3.292 +0.15% +8.71%
Hungarian forint <EURHUF=> 239.350 239.350 0% +5.34%
Croatian kuna <EURHRK=> 7.111 7.101 -0.14% +2.94%
Romanian leu <EURRON=> 3.625 3.631 +0.17% -1.25%
Serbian dinar <EURRSD=> 76.258 76.620 +0.47% +3.18%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to -11bps over bmk*
5-yr T-bond CZ5YT=RR +4 basis points to -16bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +23bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +226bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +180bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +158bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +500bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +471bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +359bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1012 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Patrick Graham)
