* Leu outperforms with IMF deal, strong dlr hits FX
* Hungary local bonds touch firmer after dollar issue
* Demand twice offer at new Czech 3-year bond sale
(Adds Serb dinar, Czech auction)
By Jason Hovet
PRAGUE, Jan 27 (Reuters) - The leu edged higher on Wednesday
after the IMF signed off on the next payments from Romania's 20
billion euro aid deal while other emerging European currencies
slipped behind a stronger dollar.
The International Monetary Fund opened the way for Romania
to receive some 3.3 billion euros in international loans over
the next two months. []
Approval of a cost-cutting 2010 budget this month
kick-started 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 0.3 percent at 4.111 to the
euro by 1217 GMT, outperforming others in the region like the
Hungarian forint <EURHUF=>, which fell 0.2 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=> lost 0.2 percent along with small
drop for the Polish zloty <EURPLN=> as a stronger dollar cut
appetite for riskier emerging market assets.
In Serbia, the dinar fell to a new record low against the
euro, hit by purchases on the energy market as providers sought
to meet demand through a cold spell. []
Stock markets pulled off lows to trade steady, pausing this
week's slide after hitting multi-month highs in January.
LEU ADVANTAGE
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.
The leu has posted the strongest gains of central European
currencies this year with a 3 percent rise since Jan 1. A new
government ended a months-long political deadlock in Romania,
particularly hard hit by the global downturn. []
Analysts, though, say the new centrist coalition will have a
tough time pursuing their IMF-mandated reform agenda.
A Reuters poll earlier this month forecast the leu to weaken
over the next three months to 4.2 to the euro, while other
currencies to hold roughly steady. <CEEFXPOLL09>
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 a touch higher on Wednesday. Czech
bonds were mixed, with a demand more than double the offer at a
new 3-year bond auction. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.06 26.023 -0.14% +0.99%
Polish zloty <EURPLN=> 4.077 4.075 -0.05% +0.66%
Hungarian forint <EURHUF=> 271.36 270.81 -0.2% -0.37%
Croatian kuna <EURHRK=> 7.291 7.291 0% +0.25%
Romanian leu <EURRON=> 4.111 4.122 +0.27% +3.07%
Serbian dinar <EURRSD=> 97.89 97.71 -0.18% -2.05%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +135bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +124bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +383bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +326bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -5 basis points to +528bps over bmk*
5-yr T-bond HU5YT=RR -7 basis points to +496bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +442bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1321 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 []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford and Toby Chopra)
