* Hungarian forint falls after Monday rate meeting
* Zloty supported by rate hike expectations, selloff inflows
* Investors eyeing Romanian cbank rate meeting on March 31
(Updates throughout)
By Luiza Ilie and Dagmara Leszkowicz
BUCHAREST/WARSAW, March 29 (Reuters) - Central Europe's
currencies were mixed on Tuesday, with Hungary's forint falling
to a five-day low after the country's central bank left rates on
hold on Monday and the Polish zloty flat but supported by rate
hike expectations and news of planned privatisations.
Hungary's central bank left interest rates at 6 percent as
expected in a unanimous vote attended by three new policymakers
on Monday <NBHI>. It indicated rates would stay on hold for a
sustained period to meet its inflation target. []
Poland's central bank is expected to hike borrowing costs at
its meeting next week after a board member was quoted as saying
that a change in rates in April was "very probable".
[]
Analysts polled by Reuters earlier this month expected the
central bank to raise rates by a quarter of a percentage point
from the current 3.75 percent, although data releases have since
sent conflicting signals.
The Polish zloty could also find support from investment
flows related to planned government asset sales, traders said.
Polish Treasury Minister Aleksander Grad said on Tuesday
Poland will sell at least 10 percent of the country's top bank,
PKO BP <PKOB.WA>, in a secondary public offering scheduled for
the second half of September. []
"The treasury minister has shaken the market today, and it
looks like privatisation inflows are likely to be one of the key
drivers for the market in the coming months," said Karol
Zaluski, chief FX dealer at ING bank in Warsaw.
By 1451 GMT, the forint <EURHUF=> was down 1.0 percent on
the day against the euro. The zloty <EURPLN=> edged some 0.1
percent lower, while the Czech crown <EURCZK=> was flat.
"I think it is a correction, profit-taking," said one trader
in Budapest. "The ECB is expected to hike interest rates, same
for Poland, the Czech Republic. You cannot expect the forint to
get stronger forever."
PROFIT TAKING
Elsewhere in the region, the Romanian leu <EURRON=> shed 0.4
percent against the single currency as profit-taking continued
after the unit hit a one-year high last week on central bank
comments. []
Markets are looking forward to a rate-setting meeting on
Thursday and widely expect the bank to keep borrowing costs
unchanged at 6.25 percent.
Stubborn inflation has prompted analysts to revise their
earlier expectations of rate cuts later this year, and most now
expect the central bank to keep rates frozen in 2011.
Traders said the region could see some risk aversion, driven
by mounting worries about Japan's crippled Fukushima nuclear
plant and uncertainty over the impact of fighting in oil
producer Libya.
Stocks across the region were mostly in the red on Tuesday,
falling some 0.1-0.7 percent
On the bond markets, Polish paper was steady on Monday,
while Hungary's bonds fell across the curve, with bond yields
rising some 1-5 basis points.
"There could be a bit of a correction despite the overall
positive mood, as assets have reached technical levels, both the
forint and bonds," the dealer said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.525 24.522 -0.01% +1.94%
Polish zloty <EURPLN=> 3.989 3.992 +0.08% -0.78%
Hungarian forint <EURHUF=> 267.93 265.3 -0.98% +3.75%
Croatian kuna <EURHRK=> 7.386 7.362 -0.32% -0.08%
Romanian leu <EURRON=> 4.118 4.103 -0.36% +2.79%
Serbian dinar <EURRSD=> 103.51 103.5 -0.01% +2.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to 4bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +67bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +71bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +324bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +319bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +301bps over bmk*
The P
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +472bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +438bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +394bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1551 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Writing by Luiza Ilie; Editing
by Catherine Evans)
