* FX retreat with euro/dollar, stocks
* Romania, Hungary debt auctions due
PRAGUE, Nov 19 (Reuters) - The Polish zloty and Hungarian
forint led a retreat in central European currencies on Thursday
after weaker equities and a rebounding dollar pulled investors
away from riskier emerging markets.
Romania's leu bucked the trend to hold a five-week high
before the first round of presidential elections on Sunday and
with the risk of central bank intervention hanging over the
unit.
The leu <EURRON=> was steady to bid at 4.275 to the euro by
0927 GMT, while the forint <EURHUF=> fell 0.7 percent to 267.3
to the euro. The Czech crown <EURCZK=>, often seen as a safe
haven bid in the region, dipped 0.2 percent to 25.475 per euro.
The zloty <EURPLN=> lost 0.6 percent ahead of industrial
output data later in the day which some dealers said could be
above expectations to give a boost to the currency.
"The region has been benefitting from a weakening dollar and
strengthening equities, but that looks over now," a Prague-based
dealer said. "It is still risk on/risk off."
European stocks fell, with Warsaw <> and Budapest
<> both down more than 1 percent. Currency weakness also
knocked back bonds in the region.
The crown, zloty and forint have posted as much as 4 percent
gains this month, propelled by dollar weakness giving investors
cheap funding options, signs of an economic turnaround in some
of central Europe's hardest-hit economies, and, in the forint's
case, a higher yield carry.
However, investors globally cut gains on Thursday across
emerging markets as capital control measures came into view
after Brazil's attempt to curb foreign inflows into its soaring
currency. []
Brazil unveiled a 1.5 percent tax on certain trades
involving American Depositary Receipts issued by Brazilian com
panies, aiming to close a loophole that allows investment to
flow into local stocks tax-free. []
STRONGER FOR NOW
In Romania, markets were looking to weekend elections, with
the eventual winner given the responsibility of choosing the
next prime minister who will lead talks with the IMF.
The International Monetary Fund said on Wednesday aid
discussions would continue, and a mission would return to the
country after the political situation was "clarified."
The IMF halted a review of Romania's 20 billion euro aid
package on Nov. 6 after the centrist government was toppled last
month. [] []
"I see no other reason why (the leu) firmed," said a trader.
"Some say it's to have it firmer at the time of election."
The leu has been stuck in a tight range since October, while
the government has run into trouble selling its debt. On
Thursday, Romania's finance ministry tenders 850 million lei
worth of three-year treasury bonds.
Hungary also auctions bonds, which have been supported on
local markets by expectations of monetary policy easing.
Hungarian Finance Minister Peter Oszko said on Thursday that the
country's restrictive fiscal policy leaves room for less
restrictive central bank monetary policy. []
But short-dated yields rose in pre-auction positioning to
weaken prices, and after the debt agency announced on Wednesday
a switch auction next week. []
Hungarian and Romanian interest rates are more than double
those of Poland and the Czech Republic.
The next move in Czech rates could either be a cut or a hike
and it should not be assumed they were at their lowest despite a
risk inflation could rise above expectations, central bank Vice
Governor Mojmir Hampl said on Wednesday. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.475 25.42 -0.22% +5.02%
Polish zloty <EURPLN=> 4.127 4.101 -0.63% -0.29%
Hungarian forint <EURHUF=> 267.3 265.46 -0.69% -1.4%
Croatian kuna <EURHRK=> 7.312 7.315 +0.04% +0.72%
Romanian leu <EURRON=> 4.275 4.272 -0.07% -6.1%
Serbian dinar <EURRSD=> 94.45 94.27 -0.19% -5.26%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -16 basis points to 101bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +115bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +96bps over bmk*
Polish treasury bonds <0#PLBMK=>
5-yr T-bond PL5YT=RR +4 basis points to +328bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +12 basis points to +536bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +467bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +405bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1028 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 Mike Peacock and Victoria Main)
