* CEE assets gain as dollar crosses key 1.50 mark vs euro
* Poland central bank seen keeping rates on hold at 3.50 pct
(Adds bonds, quotes, writes through)
By Marton Dunai
BUDAPEST, Nov 25 (Reuters) - Currencies in emerging Europe
posted narrow gains on Wednesday and bond yields followed lower
as the dollar weakened and markets ignored scarce local data,
with Polish rates seen unchanged at a meeting later in the day.
"It is broadly expected that the Polish central bank will
keep its key policy rate at 3.50 percent," Danske Bank said in a
note.
"But if the central bank makes some comments on the lower
latest inflation figures and weak wage growth, that could mean
moderate downside risk for Polish rates."
15 out of 19 analysts said in a recent Reuters poll that
Poland would leave rates unchanged well into next year, holding
fire in the only country in eastern Europe which is seen escaping
recession. []
"We still view the (zloty) positively and see further
potential towards end of the year to 4.0 (per euro)," UniCredit
said in a note. <EURPLN=>
"(We) do not expect a radical policy change in the next
meeting given that it will mark the end of term of the MPC
board," it added.
Markets have largely ignored Hungary's decision earlier in
the week to trim rates by another 50 basis points to bring the
key rate to 6.5 percent, the lowest level since mid 2006.
[]
As the dollar, often a barometer of risk appetite, hit a
7-week low versus the yen and again crossed the 1.50 mark
against the euro, Poland's zloty gained 0.3 percent versus the
euro by 1010 GMT. The Hungarian forint and the Romanian leu
added 0.2 percent, while the Czech crown was flat.
The Czech crown recouped some losses after falling to the 26
per euro level dealers said it had targeted. It is widely
expected to change little in the coming weeks as almost nobody
sees the central bank lowering interest rates in December.
"The 26 per euro level is what we'll see until the end of
the year and we could (move) in a range of 25.900 to 26.100," a
Prague dealer said.
Another potential risk could be defused in Latvia, where the
prime minister said the country's loan programme with the
European Union and International Monetary Fund will remain on
track if parliament passes the planned 2010 budget. []
BOND YIELDS LOWER
Bonds yields region-wide ticked a tad lower, in lockstep
with currencies and ignoring what little domestic data was
released.
In Poland, bonds shrugged off retail sales data, which
showed slightly lower growth than forecast [], as
well as unemployment figures, which came in, as expected, at
11.1 percent [].
"Generally there aren't many changes on the market, global
sentiment is positive," a Warsaw-based dealer said. "The finance
ministry will want to sell lots tomorrow to improve the
ministry's plight next year."
Poland's budget deficit is expected to rise to 7 percent in
2010 from 6.2 percent seen in 2009. []
Hungarian and Czech yields were also lower in a quiet
market.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.058 26.069 +0.04% +2.67%
Polish zloty <EURPLN=> 4.111 4.123 +0.29% +0.1%
Hungarian forint <EURHUF=> 267.45 268.12 +0.25% -1.46%
Croatian kuna <EURHRK=> 7.308 7.305 -0.04% +0.78%
Romanian leu <EURRON=> 4.257 4.265 +0.19% -5.7%
Serbian dinar <EURRSD=> 94.414 94.02 -0.42% -5.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -8 basis points to +96bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +112bps over bmk*
10-yr T-bond CZ10YT=RR -6 basis points to +95bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +358bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +327bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +511bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +464bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +410bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1110 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Marton Dunai; Editing by Ruth Pitchford)
((marton.dunai@reuters.com; +36 1 327 4742; Reuters
Messaging: marton.dunai.reuters.com@reuters.net))
