* Currencies firm, zloty leads as FX options fcasts upbeat
* Polish cbank holds rates, but sticks to easing bias
* Polish PM says 2013 as good as 2012 for euro entry
* Region benefits from dollar, yen weakening
* Czech eurobond eases pressure on local debt market
(Adds Polish cbank comments, market reaction)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, April 29 (Reuters) - Emerging European
currencies firmed on Wednesday on the back of a weaker dollar
and yen, while the zloty got a boost from lower forecasts for
the scale of companies' exposure to soured currency options.
The zloty firmed more than its peers as Poland's financial
watchdog halved its prediction for the option exposure, one
driver of the currency's weakness since last year, to 4.5
billion zlotys. []
Markets showed little reaction to Poland's central bank's
decision to pause in its cycle of interest rate cuts for the
first time since November, with many analysts saying the bank is
still likely to ease borrowing costs further. []
The bank itself also said it would maintain an easing bias
as it eyes growth outlook, inflation pressures, as well as the
financial markets and the zloty's course for its rate decisions.
[]
Poland was firmly in focus throughout the day on Wednesday,
dealers said, dictating the tempo on other regional markets
except in the Czech Republic, where the crown has outperformed
the region in 2009.
"The Polish zloty is leading the dance in the region," a
dealer in Budapest said. "This started yesterday and continued
today; euro/forint and euro/zloty longs were knocked out."
By 1500 GMT, the zloty <EURPLN=> rose 1.6 percent from the
domestic close, the Hungarian forint <EURHUF=> gained 1.3
percent, while the Czech crown <EURCZK=> lost 0.2 percent and
the Romanian leu <EURRON=> added 1 percent.
BUDGET CONCERN
The Polish central bank's governor, Slawomir Skzypek said
the Monetary Policy Council was "deeply concerned" over Poland's
ballooning budget deficit, which will keep it out of the euro
zone longer than previously anticipated. []
Polish Prime Minister Donald Tusk added fuel to that fire by
saying he was "not sure" the country would join ERM-2, the
waiting room for the euro, by June as planned. []
"The (central bank's) statement is similar to the one from
the previous month, it is no surprise for investors," said BRE
Bank dealer Pawel Bialczynski.
Poland has cut rates by 225 basis points since November,
adding to the weakening pressure on the zloty, which lost 30
percent from 2008 highs as the financial crisis unfolded.
Dealers said the region also gained from stronger tolerance
to risk due to benign U.S. housing data on Tuesday and some
stronger than expected corporate results.
In debt markets, Hungarian bonds changed most, ticking up on
the forint's gains, especially when the currency strengthened to
290 against the euro, a psychological barrier. Liquidity
improved and ranges narrowed, a dealer said in Budapest.
The Czech Republic priced a 1.5 billion 2014 euro bond on
Wednesday, and said it was unlikely to return to international
markets this year. [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.753 26.71 -0.16% 0%
Polish zloty <EURPLN=> 4.416 4.485 +1.56% -6.82%
Hungarian forint <EURHUF=> 289.25 292.9 +1.26% -8.89%
Croatian kuna <EURHRK=> 7.408 7.436 +0.38% -0.58%
Romanian leu <EURRON=> 4.173 4.213 +0.96% -3.8%
Serbian dinar <EURRSD=> 94.875 95.02 +0.15% -5.69%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 189bps over bmk*
4-yr T-bond CZ4YT=RR +8 basis points to +209bps over bmk*
8-yr T-bond CZ8YT=RR 0 basis points to +300bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +416bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +347bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +305bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -27 basis points to +872bps over bmk*
5-yr T-bond HU5YT=RR -58 basis points to +812bps over bmk*
10-yr T-bond HU10YT=RR -48 basis points to +716bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1641 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; writing by Marton Dunai and
Marius Zaharia; editing by Patrick Graham)
