* Leu outperforms on IMF deal, strong dollar hits CEE FX
* Demand twice offer at new Czech 3-year bond sale
* Hungary dollar bond may dampen auction demand on Thurs
(Updates markets, adds comments, writes through)
By Jason Hovet and Marton Dunai
PRAGUE/BUDAPEST, Jan 27 (Reuters) - The leu outperformed
peers on Wednesday after the IMF unlocked Romania's 20 billion
euro aid package, while the Hungarian forint led regionwide
easing caused by the stronger dollar.
The International Monetary Fund opened the way for Romania
to receive a 3.3 billion euro chunk from its loan package after
elections ended a political impasse and the country approved a
cost-cutting 2010 budget. []
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 0.1 percent to the euro by 1421
GMT, outperforming others in the region.
"This is good news for the currency," said Lutz Karpowitz, a
strategist at Commerzbank. "It makes investments in the currency
safer; the risk premium is lower," he added.
The strong dollar cut appetite for assets elsewhere in the
region, pushing the Hungarian forint <EURHUF=> 0.7 percent
lower. The Polish zloty <EURPLN=> eased 0.5 percent and the
Czech crown <EURCZK=> 0.3 percent.
Hungary sold $2 billion worth of dollar-denominated debt on
bids of $7 billion on Tuesday, but the successful bond sale
failed to give support to the currency. []
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 were mixed after a recent slide off January's
multi-month highs, with the Budapest index falling 0.9 percent
by 1428 GMT, while Warsaw eased 0.2 percent and Prague was flat.
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, rising nearly 3 percent since Jan 1.
Analysts, though, say the new Romanian government 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>
Hungarian bond yields were broadly unchanged on Wednesday,
and a dealer said local bond auctions <HUISSUE> on Thursday
might see muted demand because of Tuesday's dollar bond sale.
"Those who bought the 10-year dollar bond may not buy the 10
-year forint bond tomorrow," he said.
Finance Minister Peter Oszko told Reuters the country was
unlikely to turn to international markets again this year,
financing the rest of its debt locally. []
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=> 26.112 26.023 -0.34% +0.79%
Polish zloty <EURPLN=> 4.097 4.075 -0.54% +0.17%
Hungarian forint <EURHUF=> 272.8 270.81 -0.73% -0.9%
Croatian kuna <EURHRK=> 7.31 7.289 -0.29% -0.01%
Romanian leu <EURRON=> 4.12 4.122 +0.05% +2.85%
Serbian dinar <EURRSD=> 98.01 97.71 -0.31% -2.17%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to +93bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +138bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +127bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +382bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +330bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +546bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +502bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +441bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1521 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, Toby Chopra and Andy Bruce)
