* FX track core markets, investors await cbank meetings
* IMF visits Romania to discuss 2010 budget
* Poland's deficit may reach 6.5 pct of GDP, finmin says
* Czech data weak, finance minister stays
(Updates throughout)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, Dec 14 (Reuters) - Central European
currencies trimmed some of the early gains on Monday, tracking
global sentiment as domestic markets were readying for interest
rate meetings across the region over the next two weeks.
The Czech crown led regional gains in thin trade, with
markets eyeing a central bank meeting on Wednesday, when rates
are seen remaining flat at a record low of 1.25 percent,
although some players still see chances for a 25 basis point
cut. []
Elsewhere, Hungary is seen chopping 50 basis points off its
benchmark rate next week, while Poland, the only regional
economy to escape recession this year, is seen holding fire.
At 1502 GMT, the crown <EURCZK=> was 0.3 percent stronger,
the Hungarian forint <EURHUF=> was 0.1 percent weaker, while the
Polish zloty <EURPLN=> was an inch firmer.
Currencies firmed early in the session on Abu Dhabi's
decision to throw neighbour Dubai a $10 billion lifeline to
repay its debts [], but later trimmed some gains when
the dollar recovered in early U.S. trade.
"The region is quietly tracking global trends," one dealer
in Bucharest said. "Only rate meetings can make the difference
until the end of the year ... or Romania getting the (next) IMF
tranche."
An International Monetary Fund team was due in Romania to
discuss the 2010 budget plan and dealers said the market is
eyeing what measures the acting government will propose to the
IMF. [].
Romania's central election bureau said on Sunday a recount
of annulled votes in the country's presidential election had
failed to overturn centre-right incumbent Traian Basescu's
victory. []
Basescu won the Dec. 6 runoff by around 70,000 votes against
leftist challenger Mircea Geoana, who contested the result at
the Constitutional Court saying the election was marred by
fraud, thus prolonging a political crisis and delaying vital
fiscal cuts needed to bring the IMF deal back on track.
Romania's leu <EURRON=> gained some 0.2 percent to the euro.
A T-bill auction in which the country sold less than planned at
its cutoff yield of 10 percent <BNR040> failed to move the
steadiest and most illiquid market in the eastern European
Union.
DEFICIT WORRISOME
The zloty led losses last week with a 2 percent fall that
was fuelled by data showing the current account gap unexpectedly
widened to 991 million euros. []
The country's Finance Minister Jacek Rostowski said the
general government deficit may reach 6.0-6.5 percent of gross
domestic product (GDP) this year. Analysts polled by Reuters
expect the deficit to stand at 6.2 percent. []
Poland is at risk of breaching national debt safety levels
that would automatically trigger painful fiscal tightening.
In the Czech Republic, Finance Minister Eduard Janota agreed to remain at
the position after threatening to quit last week as parliament approved next
year's budget with changes that push the public sector deficit to 5.9 percent of
GDP. []
The Czech statistics office data showed retail sales fell by 4.7 percent in
October, while industrial output dived 7.2 percent year-on-year in the same
period. [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.76 25.838 +0.3% +3.85%
Polish zloty <EURPLN=> 4.155 4.159 +0.1% -0.96%
Hungarian forint <EURHUF=> 273.52 273.25 -0.1% -3.65%
Croatian kuna <EURHRK=> 7.259 7.276 +0.23% +1.46%
Romanian leu <EURRON=> 4.245 4.254 +0.21% -5.43%
Serbian dinar <EURRSD=> 95.93 95.89 -0.04% -6.72%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +21 basis points to 102bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +99bps over bmk*
10-yr T-bond CZ10YT=RR +8 basis points to +88bps 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 0 basis points to +338bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +559bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +505bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +441bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1702 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 Ruth Pitchford and Andy Bruce)
