* Polish zloty hit as finmin FX plan could slow rate hikes
* Romanian leu bolstered by upcoming IMF review
* Stocks mostly down in thin Easter trade
(Updates prices)
By Luiza Ilie
BUCHAREST, April 22 (Reuters) - The Polish zloty weakened
against the euro on Friday in Easter trade as prospects of a May
interest rate hike dimmed, while an upcoming International
Monetary Fund aid review bolstered Romania's leu.
Other emerging European currencies were steady against the
euro in trade thinned significantly by the closure on both
Friday and Monday of major markets like London and Hong Kong.
By 1337 GMT, the zloty <EURPLN=> was 0.2 percent weaker
versus the euro. It jumped briefly by 1 percent on Thursday when
the Finance Ministry said it would convert some of the 30-32
billion euros it will receive in European Union funds through
the end of 2012 in the spot market.
Economists said this could push the zloty up in the near
term and potentially postpone an expected interest rate hike by
a central bank fighting persistently high inflation.
"The likelihood of an interest rate hike in Poland in May,
given the likely positive impact of the news on the zloty, has
probably fallen, in our view," Barclays bank said in a note.
Markets will focus next week on the release of Poland's
budget deficit and public debt data for 2010.
The leu <EURRON=> was 0.3 percent stronger against the euro
after the IMF said it will send a team to Bucharest from April
27 to May 9 to review the country's new precautionary two-year
aid deal. []
Romania, which has enforced painful measures to shore up
public finances and keep a now completed 20-billion-euro IMF-led
aid package on track, agreed to a new deal in February,
reassuring investors it is still committed to fiscal reform.
Traders said money sent home ahead of Easter from Romanian
migrants working abroad also helped shore up the currency.
Workers' remittances, the equivalent of some 3 percent of
GDP two years ago, fell sharply last year and in 2009 as weak
recoveries clouded the jobs climate in western economies, but
recent data showed a significant improvement so far this year.
Elsewhere in the region, the Czech crown <EURCZK=> was flat
while the Hungarian forint <EURHUF=> was 0.3 percent weaker,
while bond yields were roughly unchanged.
HUNGARIAN BOND RALLY
Hungarian assets have been in strong demand this year, with
debt yields falling and the currency strengthening on optimism
over the government's fiscal reform plans.
"I expect further gains in Hungarian bonds next week," a
trader said, adding mostly the shorter and medium segments of
the bond market were attracting buyers.
BNP Paribas said in a note on Thursday that the pace of the
Hungarian bond rally could be too fast.
"While we think that foreign investors are still not
overweight HGBs, the pace of the adjustment is a bit worrying,"
it said.
"...Foreign investors have also been reducing the duration
of their holdings in the last few months, which probably
reflects still-high uncertainty on the fiscal side."
Shares in the region were also mixed, with Prague's <>
and Budapest's markets <> down 0.2 and 0.6 percent
respectively, while Bucharest's <> was 0.8 percent firmer.
The Warsaw stock exchange and bond market were closed.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.087 24.077 -0.04% +3.79%
Polish zloty <EURPLN=> 3.948 3.94 -0.2% +0.25%
Hungarian forint <EURHUF=> 264.75 264.05 -0.26% +5%
Croatian kuna <EURHRK=> 7.356 7.357 +0.01% +0.33%
Romanian leu <EURRON=> 4.075 4.088 +0.32% +3.88%
Serbian dinar <EURRSD=> 100.61 100.6 -0.01% +5.28%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -7 basis points to -9bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +47bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +74bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +446bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +419bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +376bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1537 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaus; Writing by Luiza Ilie;
Editing by John Stonestreet)
