* Off lows after profit-taking, Latvia worries hurt
* Hungary debt auctions successful, to issue eurobond
(Updates throughout)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, July 16 (Reuters) - Central European
currencies regained part of the morning losses on Thursday,
helped by the success of Hungarian debt auctions which offset
poor regional wage data and budget worries in Latvia.
Currencies looked set to reverse a lot of this week's gains
early on Thursday when investors started to book their profits
and under the pressure of uncertainties over wage data in Poland
and Latvia's 2010 budget, key for further IMF financing.
[]
But Hungary's success in selling 64 billion forints of debt
on Thursday [], with all its three bond auctions
oversubscribed and a stronger than expected result of JPMorgan
in U.S. [] revived the region.
"The auctions surprised the market a bit, yields were
narrower than expected, but the fact that (debt agency) AKK
could sell more than originally offered is for sure a positive
sign," a dealer in Budapest said.
By 1325 GMT, the Polish zloty <EURPLN=> had lost 0.2
percent, while the Czech crown <EURCZK=> and the Hungarian
forint <EURHUF=> were little changed from the previous close.
All three currencies were off morning lows.
"JPMorgan and the signal sent by Hungarian (debt) auctions
helped in late trade," one Bucharest-based dealer said.
Hungary also announced it has mandated Citigroup and ING
Bank to lead manage a five-year eurobond issue likely this week,
seen as a litmus test to see whether Hungary will need to extend
its current IMF facility. []
This comes after a successful $2 billion 10-year eurobond by
Poland last week and 1.5 billion euros worth of 5-1/2 year bonds
on international markets by Czech Republic in April, all
pointing to increased interest in regional debt following an
overall rebound in risk appetite in recent months.
DATA STILL POOR
Romania's leu <EURRON=> edged down slightly after the
finance minister said the economy may drop by 6.5-7.1 percent
this year, much more than an IMF forecast of 4 percent and some
ministers' prediction of about 6 [].
Polish and Hungarian wage data both failed to meet
expectations on Thursday and offered a new example of the
region's economic headaches [] [].
"If this trend (for lower wage growth) continues then
chances for interest rate cuts will increase," said Grzegorz
Maliszewski of Millennium Bank.
"Long-term bonds could gain because weak wage growth shows
that inflationary pressures... will abate and the inflation
outlook looks positive."
However, Polish bonds were little changed by the data and
remained stable on the day, after papers' yields fell 3 basis
points across the curve on Wednesday on the successful 5-year
bond auction. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.866 25.855 -0.04% +3.43%
Polish zloty <EURPLN=> 4.29 4.281 -0.21% -4.08%
Hungarian forint <EURHUF=> 273.43 273.47 +0.01% -3.61%
Croatian kuna <EURHRK=> 7.335 7.32 -0.2% +0.41%
Romanian leu <EURRON=> 4.23 4.214 -0.38% -5.1%
Serbian dinar <EURRSD=> 92.927 93.217 +0.31% -3.71%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to 156bps over bmk*
4-yr T-bond CZ4YT=RR +5 basis points to +173bps over bmk*
8-yr T-bond CZ8YT=RR +16 basis points to +305bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +312bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +282bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +30 basis points to +737bps over bmk*
5-yr T-bond HU5YT=RR +24 basis points to +658bps over bmk*
10-yr T-bond HU10YT=RR +22 basis points to +544bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1625 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
and Marius Zaharia; editing by ...)
