* Zloty pulls back from highs along with its peers
* IMF credit line should stabilise zloty, officials say
* Debt auctions well bid
(Adds detail, quotes, updates prices)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, April 15 (Reuters) - The Polish zloty
regrouped with its peers to weaken on Wednesday, giving back
some of the sharp gains achieved on the back of the government's
decision to secure a flexible credit line from the IMF.
The zloty <EURPLN=> hit a three month high early on
Wednesday, before weakening with emerging European peers in a
sharp reversal of sentiment, with shares slipping and the
safe-haven dollar gaining on a raft of poor corporate news.
By 1448 GMT, the zloty fell 0.3 percent to 4.26 per euro.
Poland is set to tap the IMF flexible credit line for $20.5
billion, following Mexico into a programme to help fundamentally
stronger countries out of the financial crisis. []
"The zloty can continue to outperform in the coming weeks
... as the credit line is a catalyst to unlock its fundamental
value over the region," said UniCredit's Martin Blum.
"It reduces the opportunity to use the zloty as a proxy when
the region weakens and it increases the ammunition of the
government and the central bank to support the currency."
In Hungary, the forint <EURHUF=> weakened 0.9 percent after
getting a lift on Tuesday from lawmakers endorsing new Prime
Minister Gordon Bajnai to lead the struggling country out of
recession []
"Political developments were a slight positive...," one
dealer in Budapest said. "But before we can see the concrete
(fiscal adjustment) measures, the market impact will not be
substantial."
Romania's leu <EURRON=> dipped 0.8 percent, after the
central bank injected 3.74 billion lei in a one-month repo deal
at 10 percent <BNR012>.
The Czech crown <EURCZK=> dropped 1.0 percent. The Czech
Republic, also counted among fundamentally stronger emerging
countries, still did not need to ask for external aid, its
finance ministry said on Wednesday. []
Polish Finance Ministry officials said the country will
likely not use the credit line, but said access to the line will
limit volatility in the zloty, which has strengthened around 15
percent since mid-February, when it neared all-time lows.
Zloty volatility has been one of the biggest obstacles to
the country joining the pre-euro rate exchange ERM-2 mechanism
by June, a necessary step to enter the euro zone.
WELL-BID DEBT
A global equity rebound as well as G20 pledges for more
resources for emerging markets earlier this month has lifted
sentiment for riskier assets in recent weeks, boosting debt
sales, although analysts remained cautious on a full recovery.
Polish bonds strengthened on Wednesday, tracking earlier
currency gains and some dealers said even the possibility of an
end to the central bank's easing cycle -- which has brought
interest rates to a historic low -- should not pose a threat.
"Today's (inflation) data makes it more likely that Poland's
central bank will consider pausing," Nordea Bank said in a note.
Polish consumer prices <PLCPIY=ECI> rose 3.6 percent
year-on-year in March, above forecasts for a 3.4 percent rise.
[]
In Czech Republic, investors jumped on the new 3-year,
floating-rate government bond in an inaugural auction on
Wednesday, continuing a run of strong auctions [].
While in Hungary, the debt agency repurchased bonds worth 34
billion forints at its regular weekly auction, which have helped
shave some 200 basis points of yields in recent months.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.757 26.488 -1.01% -0.01%
Polish zloty <EURPLN=> 4.26 4.248 -0.28% -3.4%
Hungarian forint <EURHUF=> 290.76 288.07 -0.93% -9.36%
Croatian kuna <EURHRK=> 7.37 7.372 +0.03% -0.07%
Romanian leu <EURRON=> 4.185 4.153 -0.76% -4.08%
Serbian dinar <EURRSD=> 93.74 94 +0.28% -4.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 180bps over bmk*
4-yr T-bond CZ4YT=RR +4 basis points to +238bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +299bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +406bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +350bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +297bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +898bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +841bps over bmk*
10-yr T-bond HU10YT=RR -13 basis points to +718bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1748 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz/Marius Zaharia; Editing by Toby Chopra)
