* Leu at 10-mth high, investors look to its carry
* Zloty touches 5-wk high before easing, further gains seen
* Bonds mixed, Polish up on Eurobond plan
By Dagmara Leszkowicz and Jason Hovet
WARSAW/PRAGUE, Jan 11 (Reuters) - The Romanian leu rose to a
10-month high on Monday on the back of its higher premium to
central European peers, while a Polish move to international
debt markets boosted local bonds.
The leu has performed the best among central European
currencies this year, lifted by the highest interest rates in
the region at 7.5 percent and expectations the passing of an
austere 2010 budget bill will free up IMF aid.
A recovery in export markets is also expected to help fuel
central European currencies this year, despite first half gains
being tempered by fiscal questions and upcoming elections in
Hungary, Poland and the Czech Republic. []
Romania's trade deficit shrank 60 percent in the January to
November period, data showed, aided by the weak leu and with the
decline in imports outpacing exports. []
The leu <EURRON=> rose to bid at 4.123 to the euro by 1602
GMT, up 0.9 percent from Friday. It has gained 2.8 percent this
year, although dealers said further gains may be limited.
[] []
"The leu is in favour since the country's political
situation stabilised a little and...breaking a level of 4.15 to
the euro paves the way to its further strengthening," said
Bartosz Pawlowski, FX strategist at BNP Paribas.
"Though I think it is likely to lose impetus when it reaches
4.10."
The country has installed a new government after political
deadlock in the final quarter of 2009 that had stalled Romania's
aid payments and put the country off international debt issues.
Deputy Finance Minister Bogdan Dragoi said on Monday Romania
would issue a Eurobond of up to 1.5 billion euros in the first
quarter of this year. []
CARRY
Some dealers also said there is now more activity on
regional trades using the crown, including long leu trades, as
Czech interest rates are the lowest in the region.
The crown <EURCZK=> was 0.3 percent up on Monday at 26.15
per euro after neutral inflation data showing rates would not
likely go lower. []
In Poland, the only emerging Europe country to avoid
recession last year, the zloty rose in early trade to the strong
side of 4.05 to the euro on the weaker dollar before easing.
Some dealers said 4.0 per euro was the next target level.
News that Poland would place a 15-year bond worth 3 billion
euros, eased local pressure on bonds and sent yields 5-7 percent
lower. A source told Reuters demand for the bonds was 6 billion
euros. []
Some dealers said the hefty demand showed markets believed
the plan would help Poland tackle rising debt. The government
expects public debt to be a touch less than 55 percent this
year, near legally binding levels that would trigger automatic
spending cuts. []
Elsewhere, Hungary's forint was a touch up at 267.1 to the
euro after data showing the country posted a 4.2 billion euros
trade surplus in the first 11 months of 2009. []
Stock markets in the region gained as Budapest <> led
with a 3.5 percent rise to its highest since May 2008.
The dollar's rise, which had weighed on the region, reversed
last week after weaker-than-expected U.S. jobs data. Stronger
economic signals from the region have also helped markets.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.155 26.253 +0.37% +0.62%
Polish zloty <EURPLN=> 4.062 4.066 +0.1% +1.03%
Hungarian forint <EURHUF=> 267.11 267.54 +0.16% +1.21%
Croatian kuna <EURHRK=> 7.275 7.291 +0.22% +0.47%
Romanian leu <EURRON=> 4.123 4.161 +0.92% +2.77%
Serbian dinar <EURRSD=> 97.01 97.37 +0.37% -1.16%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to 65bps over bmk*
7-yr T-bond CZ7YT=RR +11 basis points to +112bps over bmk*
10-yr T-bond CZ10YT=RR +6 basis points to +102bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +389bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +332bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +274bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +533bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +477bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +405bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1703 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaus, writing by Dagmara Leszkowicz
and Jason Hovet, editing by Stephen Nisbet, Toby Chopra and Andy
Bruce)
