* Czech crown edges up; cbank gov turns hawkish
* Hungary sells 3-mth bills at higher yield after rate rise
* Romanian leu supported by Fondul Proprietatea listing
(Recasts with new detail, quotes)
By Krisztina Than and Marius Zaharia
BUDAPEST/BUCHAREST, Jan 25 (Reuters) - Emerging European
currencies edged up on Tuesday but gains were capped by
uncertainty over the interest rate outlook, although Hungarian
bond yields hit fresh nine-month lows.
Czech central bank Governor Miroslav Singer said the Czech
economy was showing slightly stronger-than-expected inflationary
pressures, echoing hawkish comments by board member Pavel
Rezabek earlier this month. [] []
Markets are pricing in a rate hike by the middle of the
year, and a cumulative rise of 75 basis points by the end of
2011. Singer's comments had little impact on the crown, which
fluctuated in a narrow range for most of the session.
Komercni Banka, however, said in a report on Tuesday that
uncertainty abroad and an outperforming crown would encourage
policymakers to keep rates on hold for longer than the market
expects.
"We still believe that the first hike should come in Q411,"
Komercni Banka said.
"The timing is obviously uncertain and the risks to our
outlook point towards an earlier hike. Nevertheless, the market
expectations of three hikes by the end of this year are,
according to our view, too optimistic."
By 1447 GMT, the crown <EURCZK=> had recovered earlier
losses to trade 0.1 percent up on the day. The Hungarian forint
<EURHUF=> was flat, while the Polish zloty <EURPLN=> was up 0.2
percent.
Local markets were digesting Polish and Hungarian rate rises
in the past week and assessing the outlook for the year.
Hungary's government criticised the central bank for raising
rates on Monday, saying it hindered economic and job growth.
[]
The yield on a Hungarian three-month treasury bill auction
rose 30 basis points on Tuesday following the rate rise, the
third in as many months. []
But on the secondary market, yields fell some 15 percent
across the curve to hit fresh nine-week lows.
"The central bank's interest rate hike yesterday may have
been a surprise (to some investors), but now they say: the bank
increased rates now instead of doing that in February, therefore
there will be no more rate increases," one Budapest trader said.
Polish bond yields fell on Tuesday after Monetary Policy
Council member Andrzej Bratkowski suggested the next interest
rate rise could be delayed until mid-year rather than in March.
[]
LISTING SUPPORTS LEU
The Romanian leu, which usually decouples from regional
moves due to years of range-trading caused by suspected covert
central bank interventions, gained marginal support from the
listing of closed-end fund Fondul Proprietatea, dealers said.
The fund, set up to compensate citizens whose property was
confiscated under communism, saw its shares trading at 0.6490
lei at 1440 GMT from about 0.50 lei on the over-the-counter
market in recent days, with foreign institutional investors seen
buying. []
"There's buying interest from institutional investors,
there's new, foreign money coming in," one equity trader in
Bucharest said. "I think for now there's potential to go towards
0.75, depending on global sentiment."
The leu <EURRON=> was trading 0.1 percent higher.
The International Monetary Fund has started a mission to
review Romania's 20 billion euro aid package and the two sides
are due to thrash out a fresh deal to shore up confidence in the
recession-hit economy. A new deal would help support the leu and
lower borrowing costs. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.171 24.198 +0.11% +3.43%
Polish zloty <EURPLN=> 3.867 3.876 +0.23% +2.35%
Hungarian forint <EURHUF=> 274.64 274.74 +0.04% +1.22%
Croatian kuna <EURHRK=> 7.406 7.396 -0.14% -0.35%
Romanian leu <EURRON=> 4.261 4.265 +0.09% -0.66%
Serbian dinar <EURRSD=> 104.36 104.5 +0.13% +1.5%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 52bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +79bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +96bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +365bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +338bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +309bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -17 basis points to +534bps over bmk*
5-yr T-bond HU5YT=RR -11 basis points to +503bps over bmk*
10-yr T-bond HU10YT=RR -12 basis points to +434bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1547 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux, writing by Marton
Dunai/Krisztina Than/Marius Zaharia; Editing by Catherine Evans
amd Susan Fenton)
