* FX dip, crown near 10-wk high on regional trades unwinding
* Concerns over Latvia remain, FX under pressure
* Polish budget concerns affect bonds market
(Adds fixed income, quotes)
By Dagmara Leszkowicz
WARSAW, June 19 (Reuters) - The Czech crown edged higher
against the euro on Friday, trading near highs from mid-April,
while other currencies dipped as investors remained cautious on
central European recovery prospects.
Markets watched for signals Baltic neighbour Latvia could
get another instalment of aid from the International Monetary
Fund (IMF) and the European Union to help it through the
economic crisis and protect its lat currency peg.
Worries over Latvia's troubles, including steep budget cuts
that brought thousands out in peaceful protest on Thursday
[], and possible contagion to central Europe have
caused markets to gyrate this month.
EU leaders meeting in Brussels on Friday backed plans for
swift EU aid payment, a draft declaration showed. []
At 0848 GMT the Hungarian forint <EURHUF=> fell 0.2 percent
from previous close to bid at 281.11 against the euro.
"Concerns over Latvia returned with picket lines on the
country's streets," said Jakub Wiraszka, dealer at BRE bank in
Warsaw. "It may not be a question of a fresh news, rather than
coming back to a worse sentiment despite better global data."
Poland's zloty <EURPLN=> remained almost unchanged, while
ongoing concerns over an expected Polish budget revision hit
bond markets.
"The battle is on the long-end of the curve as investors
remained cautious on a possible cuts in a budget," said Maciej
Slomka, chief FI dealer at Pekao bank in Warsaw.
Poland's centre-right government has initially envisaged an
ambitious plan of a budget deficit at 18.2 billion zlotys, but
the market widely expects the cabinet will need to increase it
as the country's economy slows sharply due to the global crisis.
The Polish budget amendment is expected in mid-July.
CROWN OUTPERFORMANCE
Romania's leu <EURRON=> was up a touch, while the Czech
crown <EURCZK=> 0.2 percent at 26.36 per euro. The Czech
currency jumped 1 percent on Thursday on what dealers said was
unwinding of long zloty/crown positions, briefly touching its
highest since January at 26.32 in trade after domestic hours.
"It has been a combination of dollar/crown stop losses and
zloty/crown unwinding," a Prague dealer said on the crown,
adding it was mostly foreign accounts leading moves. "There is a
good chance this will continue." []
The crown has traditionally been a safer haven in the region
due to the country's lower indebtedness and stronger current
account balance.
"The market is hesitant still, and usually in this
environment the Czech currency will outperform others," said
Societe Generale strategist Murat Toprak. "The outperformance
(of the crown) is... mainly flow driven."
Investors have remained cool on east Europe's prospects
compared to emerging peers in Asia and Latin America while the
region waits for a rebound in euro zone consumption to spur its
export-reliant economies back to life. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.361 26.425 +0.24% +1.49%
Polish zloty <EURPLN=> 4.535 4.533 -0.04% -9.26%
Hungarian forint <EURHUF=> 281.11 280.67 -0.16% -6.25%
Croatian kuna <EURHRK=> 7.28 7.275 -0.07% +1.17%
Romanian leu <EURRON=> 4.217 4.221 +0.09% -4.8%
Serbian dinar <EURRSD=> 92.01 92.68 +0.73% -2.75%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +16 basis points to 146bps over bmk*
4-yr T-bond CZ4YT=RR +13 basis points to +168bps over bmk*
8-yr T-bond CZ8YT=RR +6 basis points to +276bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +835bps over bmk*
5-yr T-bond HU5YT=RR -58 basis points to +10763bps over
bmk*
10-yr T-bond HU10YT=RR -51 basis points to +677bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0948 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz)
