* Leu outperforms with IMF deal, strong dlr hits FX
* Hungary local bonds unmoved by dollar issue
By Jason Hovet
PRAGUE, Jan 27 (Reuters) - The leu edged higher on
Wednesday, while other emerging European currencies slipped in
early trade, after the IMF signed off on the next payments from
Romania's 20 billion euro aid deal.
The International Monetary Fund completed its review of the
aid package on Wednesday, saying the third and fourth tranches
of the deal would be released to Romania in mid-February.
[]
Romania's new government approved a cost-cutting 2010 budget
earlier this month, opening the way for the IMF and European
Union aid package that had been held up at the end of last year
by a political impasse.
Financial markets have been eagerly awaiting resumption of
IMF/EU money flows. Economists say the deal will provide
badly-needed funding and could allow the central bank to
stimulate the battered economy by cutting interest rates.
The leu <EURRON=> was bid up 0.2 percent at 4.115 to the
euro by 0850 GMT, outperforming others in the region like the
Hungarian forint <EURHUF=>, which fell 0.65 percent.
"This is good news for the currency," said Lutz Karpowitz, a
strategist at Commerzbank.
"Expectations were that they would not have too many
problems left to fix the deal with the IMF, so the market impact
should be limited. But it makes investments in the currency
safer; the risk premium is lower," he added.
The Czech crown <EURCZK=> also lost 0.5 percent along with
the Polish zloty <EURPLN=> as a stronger dollar cut appetite for
riskier emerging market assets.
Stock markets, after hitting multi-month highs in January,
also continued their slide this week. Budapest dropped the most
with a 0.7 percent fall <>.
Some dealers said the forint was losing out in regional
cross trades that sold the Hungarian unit to buy peers.
"The leu, especially, is bought at the forint's expense, and
the zloty as well," a Budapest dealer said. "Hence the
pressure."
The leu has posted the strongest gains of central European
currencies this year with a 3 percent rise since Jan 1 as a new
government ended a months-long political deadlock in Romania,
which has also been particularly hard hit by the global
downturn. []
Analysts, though, say the centrist coalition may face tough
times ahead in pursuing their IMF-mandated reform agenda because
of stiff leftist opposition in parliament.
Hungary is the other country in the region that sought
external aid during the global financial crisis, although it
took a first step towards coming off aid this week with the sale
of $2 billion worth of dollar-denominated debt. []
Bids for the 10-year bond totalled nearly $7 billion,
Hungary's debt agency said on Wednesday. []
Hungarian bonds were unmoved in early trading on Wednesday,
dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.145 26.023 -0.47% +0.66%
Polish zloty <EURPLN=> 4.096 4.075 -0.51% +0.2%
Hungarian forint <EURHUF=> 272.58 270.81 -0.65% -0.82%
Croatian kuna <EURHRK=> 7.288 7.291 +0.04% +0.29%
Romanian leu <EURRON=> 4.115 4.122 +0.17% +2.97%
Serbian dinar <EURRSD=> 97.91 97.71 -0.2% -2.07%
All data taken from Reuters at 0951 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)
