* FX edge up, Polish central bankers help
* EU finmin meeting on Greece, Ukraine elections watched
(adds fixed income, detail)
By Marius Zaharia
BUCHAREST, Jan 18 (Reuters) - Central European currencies
firmed on Monday, supported by bullish comments made by Polish
central bankers, while markets were closely watching a meeting
of euro zone finance ministers about Greece's fiscal woes.
Polish central bank Governor Slawomir Skrzypek said on
Monday the bank will use all available means to safeguard zloty
stability, while MPC member Andrzej Rzonca said it was very
probable that interest rates would be hiked by the end of 2010
[] [].
"The region strengthened on comments made by the Polish
governor, which are bullish on the zloty," one dealer in
Bucharest said.
At 1037 GMT, the zloty <EURPLN=> and the Czech crown
<EURCZK=> were up 0.5 percent, while the Hungarian forint
<EURHUF=> and the Romanian leu <EURRON=> were 0.1-0.2 percent
stronger from Friday's close.
Despite the lower yields, regional investors prefer the
crown and the zloty when risk appetite is fragile, because of
better fundamentals. Dealers noted some crosstrades favouring
the crown and the zloty against the forint on Monday.
Dealers expect the zloty to test the key 4.0 per euro level
this week. The leu may also test the 4.0 level, dealers said,
but added there was strong support for EURRON at around 4.1
which may be tough to break.
The crown is seen testing 25.79 per euro and if it can break
it, then it could firm towards 25.58.
Bond markets were stable ahead of a Polish treasury bills
tender and the release of debt supply details for Wednesday's
bond auction.
Central European currencies and bonds were helped this year
by an improved outlook in the region and by a higher appetite
for carry trades, but worries over fiscal imbalances and
political risk related to elections may limit gains.
Signalling improved funding conditions, the Swiss National
Bank said it will suspend fx swaps with Hungary and Poland next
week. Swap deals were made last year to provide Swiss franc
funding to banks when liquidity dried up [].
GREECE,UKRAINE IN FOCUS
Investors were eyeing a meeting of euro zone finance
ministers who will discuss Greece's fiscal problems, which have
hurt central European markets in recent months because of the
regional exposure Greek banks have and because it highlights the
region's debt problems. []
Ukraine's elections, the first in a string of ballots in
most central European countries this year, were also on the
agenda, as they are seen as key to unblock frozen help from the
International Monetary Fund [].
Official results showed on Monday Prime Minister Yulia
Tymoshenko and opposition leader Viktor Yanukovich will face a
Feb. 7 run-off.
"In the (absence) of domestic newsflow we believe the Greek
fiscal newsflow and post election developments in Ukraine will
be in the driving seat," UniCredit said in a note. "Against what
looks like a relatively shaky environment we remain happy
keeping a long PLN/HUF."
The bank said it expected last week's approval of the 2010
budget in Romania, vital to unlock billions of euros in
international aid, to continue having a positive impact on the
leu. A one-week IMF review mission will start on Wednesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.807 25.939 +0.51% +1.98%
Polish zloty <EURPLN=> 4.022 4.04 +0.45% +2.04%
Hungarian forint <EURHUF=> 267.22 267.55 +0.12% +1.17%
Croatian kuna <EURHRK=> 7.283 7.285 +0.03% +0.36%
Romanian leu <EURRON=> 4.098 4.104 +0.15% +3.4%
Serbian dinar <EURRSD=> 96.56 96.903 +0.36% -0.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -7 basis points to 71bps over bmk*
7-yr T-bond CZ7YT=RR -10 basis points to +119bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +116bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +327bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +286bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1237 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marius Zaharia;
Editing by Andy Bruce)
