* FX hold steady in ranges, markets very quiet
* Romania tenders 364-day paper, yield may fall
* Limited impact from China rate rise
(Updates prices, adds this week's Hungarian auctions)
PRAGUE/BUDAPEST, Dec 27 (Reuters) - Eastern European
currencies held broadly steady on Monday, at the start of the
final trading week of the year and dealers said trading would
likely stay muted as investors held onto profits.
The Polish zloty <EURPLN=> was flat at 1344 GMT, mostly
ignoring comments from Polish Finance Minister Jacek Rostowski
in a local newspaper interview saying the country could join the
euro zone's testing ground, the ERM2 mechanism, in 2013.
[]
The Polish currency has held on the strong side of the 4.00
per euro level over the past two weeks. Market sources told
Reuters last week that Poland's state-owned BGK bank was buying
zlotys last week in exchange for euros.
"At this point it (BGK) is a strong market force," one FX
trader said under the condition of anonymity. "If it wasn't for
(BGH) the euro/zloty would probably be higher."
Stock markets were lower, with Warsaw <> down 0.3
percent and Budapest <> inching down 0.4 percent, while
Prague <> lost half a percent, mostly on profit-taking after
rising 3 percent in its previous five sessions. There was
limited impact from a Chinese interest rate hike over the
weekend -- the kind of move that usually hits appetite for
emerging market risk assets. []
Stocks have rallied to the end of 2010 thanks to an
improving outlook in the global economy.
Poland's finance ministry is widely expected to try to keep
the zloty firm before a Dec. 31 fixing to avoid breaching debt
levels that, if exceeded, would trigger spending cuts. Almost a
quarter of Polish debt is in foreign currencies. []
The zloty is up about 1.3 percent this month, and analysts
remain bullish on the unit thanks to a better economic outlook
than peers and the likely start of monetary tightening early in
2011.
A news report on Monday said Poland's central bank head
Marek Belka backed the bank's October decision to raise the
required reserve rate for banks -- seen as a precursor to
tighter policy. []
Dealers and analysts said sharp moves in low liquid markets
in central Europe this week were still a risk.
"There might be some coincidental changes without any
short-term trends," Bank BPH said.
"If we have no further interventions on the part of BGK, the
zloty will trade inside 3.95-3.98 versus the euro with limited
market activity (since the London market is closed)."
On Monday, the zloty <EURPLN=> was flat from Friday, when
much of central Europe was on a market holiday.
Hungary's forint <EURHUF=>, which fell nearly one percent
last Thursday after Fitch downgraded the country's credit
rating, recouped 0.2 percent on Monday but still hovered around
the levels of 278.20 hit after the downgrade. []
The Czech crown <EURCZK=> inched down 0.3 percent to 25.349
per euro. With Czech interest rates the lowest in the region,
the crown has given up nearly half of its 2010 gains since
hitting a high in November.
The Romanian leu <EURRON=> was flat at 1344 GMT.
In Romania, markets were waiting for a tender of 364-day
treasury bills. Some traders expect a steepening of the curve,
with six-month and one-year maturities looking attractive, while
yields for longer-dated paper are expected to rise as Romania
tries to extend the duration of its debt.
In Hungary, yields were unchanged from last Thursday's
levels and traders said there was very little activity in the
market ahead of Tuesday's 3-month T-bill auctions and Thursday's
government bond auctions. <HUISSUE>
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.349 25.283 -0.26% +3.82%
Polish zloty <EURPLN=> 3.967 3.965 -0.05% +3.45%
Hungarian forint <EURHUF=> 278.38 278.9 +0.19% -2.88%
Croatian kuna <EURHRK=> 7.387 7.385 -0.03% -1.05%
Romanian leu <EURRON=> 4.286 4.286 0% -1.13%
Serbian dinar <EURRSD=> 105.98 104.9 -1.02% -9.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -26 basis points to 46bps over bmk*
7-yr T-bond CZ7YT=RR -9 basis points to +74bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +70bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +372bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +349bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +294bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -5 basis points to +649bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +585bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +486bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1443 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Stephen Nisbet)
