* Czech crown rises to new high
* Demand for high-yield currencies, bonds up
* Indonesia sells $2.2 billion bonds
By Sebastian Tong
LONDON, June 18 (Reuters) - The Czech crown rose to a record
high on Wednesday, boosted by data showing an unexpected
narrowing of the country's current account deficit, while fears
about higher food and oil prices curbed emerging equity gains.
Rhetoric from three leading central banks -- the U.S.
Federal Reserve, the European Central Bank and the Bank of
England -- suggesting interest rate rises may not be as
aggressive as investors had initially expected also helped to
fuel demand for emerging currencies and bonds.
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"There's been a change of sentiment about global monetary
policy with the Bank of England and the Fed seen as more
dove-ish and that's been positive for high-yielding currencies
-- the lira and the forint have all been strengthening," said
Beat Siegenthaler, chief strategist emerging markets at TD
Securities.
In contrast, most emerging markets are seen staying hawkish
on monetary policy. A Polish policymaker said late on Wednesday
that the central bank may continue to raise interest rates even
after an anticipated June rise. []
Among the day's biggest currency gainers was the Hungarian
forint <EURHUF=>, which rose 0.58 percent to trade at 243.80
against the euro at 1044 GMT. Its rise was also supported by
news that German carmaker Daimler <DAIGn.DE> had picked the
country for the site of its new car plant. []
The Czech crown <EURCZK=>, which touched an all-time high of
24.058 earlier in the session, was 0.29 percent higher at 24.09
against the euro.
"We expect macro data to be supportive for crown strength,
as the basic balance will remain positive whilst being
accompanied by robust net foreign direct investment flows," said
BNP Paribas in a research note.
But the Israeli shekel softened 0.15 percent to 3.34 against
the dollar, consolidating gains after it rose more than 2
percent on Tuesday due to interest rate rise expectations and
the country's truce with Hamas over the Gaza Strip.
NOT MUCH ISSUANCE
Benchmark sovereign debt spreads <11EMJ> tightened 1 basis
point to trade at 245 bps over U.S. Treasuries, a sign that
appetite for emerging debt remained strong.
Despite its worsening budget deficit and soaring inflation,
Indonesia completed a $2.2 billion debt sale late on Tuesday,
raising nearly 50 percent more than initially planned.
[]
"There is still a supply problem as emerging market hard
currency debt has become scarcer. There has not been that much
issuance. The funds are still there, they still have to buy,"
said TD Securities' Siegenthaler.
Slovakia, Turkey and Ukraine are among the sovereign issuers
expected to tap the capital markets in the next few months.
Meanwhile, inflation concerns continue to overshadow
emerging equity markets although the key index <.MSCIEF> edged
0.17 percent higher to 1,145.87.
Traders said a two-day rise in Asia helped to support buying
but weakness in core European markets ahead of Morgan Stanley
results was limiting gains.
(Additional reporting by Carolyn Cohn; editing by David
Stamp)
