* Romania heads full-speed to IMF-led aid, but markets wait
* Political deadlock continues in Hungary
* Currencies mixed as stock rally runs out of steam
(Adds quotes, details, bond data)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, March 24 (Reuters) - Central European
currencies pared gains on Tuesday as a rally in global stocks
stumbled, while Hungary and Czech Republic struggled with
political woes and Romania edged closer to sealing an IMF loan.
Market players watched developments in Hungary, where Prime
Minister Ferenc Gyurcsany offered over the weekend to step aside
and give way to a new leader and government to tackle the
economic crisis.
In the Czech Republic, the crown edged lower before a
no-confidence vote against the shaky minority government, and
analysts said the opposition had its best shot yet at toppling
Prime Minister Mirek Topolanek. []
Romania's leu <EURRON=> traded within recent tight ranges
around 4.29 per euro pending details of the strings attached to
an IMF-led aid package which a senior official said is worth 20
billion euros [].
The market is uncertain whether the IMF will ask the central
bank -- which dealers said has been intervening covertly to help
the currency -- to let the leu weaken more to adjust Romania's
disproportionate current account deficit.
"(The deal) will not be enough to avert a recession and it
can also mean that the leu will have to weaken considerably,"
said Bartosz Pawlowski of TD Securities. "The IMF will probably
enforce more flexibility on the central bank."
Romania has agreed with the IMF on a budget deficit target
of 4.6 percent of GDP for 2009, based on an assumption of a 4
percent economic contraction, the official said. The government
is expected to send a letter of intent to the IMF on Wednesday.
Romania would be the third of the region's EU members to
gain an IMF-led deal to ease concerns over financing due to
global credit channels drying up, following Latvia and Hungary
-- which secured a $25 billion aid package last October.
The forint <EURHUF=> gained 0.9 percent on the day to 300 to
the euro by 1500 GMT, and the crown <EURCZK=> fell 0.3 percent
to 26.91 per euro. Poland's zloty was up 0.3 percent to 4.538.
"It is uncertainty which markets do not particularly like,"
said Calyon currency strategist Stuart Bennett. "This is
certainly taking the edge off what would have been a rally given
the (move) in equities."
POLITICAL HURDLE
The global crisis has caused many job losses and created
problems for central European borrowers that sought foreign
currency loans, while social unrest has led to the collapse of
Latvia's government and violent protests in Bulgaria.
Hungary's ruling Socialists and Free Democrats had a round
of talks about possible candidates for prime minister late on
Monday and hope to pick a new leader by Thursday with broad
parliamentary support needed for drastic action to save the
recession-hit economy. []
The opposition Free Democrats said they want a crisis
management government and met former central bank governor
Gyorgy Suranyi to discuss the economy. []
"If Suranyi gets nominated, the forint may firm," one dealer
said. "Anybody else, and we need a strong program description to
have the same benefit."
Hungary's economy has suffered from the fall in demand from
the euro zone -- like other central and eastern European
countries that used foreign credit and investment to fuel strong
growth earlier this decade.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.91 26.821 -0.33% -0.58%
Polish zloty <EURPLN=> 4.538 4.55 +0.26% -9.32%
Hungarian forint <EURHUF=> 300.00 302.7 +0.90% -12.15%
Croatian kuna <EURHRK=> 7.456 7.47 +0.19% -1.22%
Romanian leu <EURRON=> 4.289 4.291 +0.05% -6.4%
Serbian dinar <EURRSD=> 94.57 94.35 -0.23% -5.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -26 basis points to 215bps over bmk*
4-yr T-bond CZ4YT=RR -18 basis points to +265bps over bmk*
8-yr T-bond CZ8YT=RR -22 basis points to +317bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -12 basis points to +402bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +352bps over bmk*
10-yr T-bond PL10YT=RR -9 basis points to +290bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +26 basis points to +1033bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +960bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +824bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1700 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/Marius Zaharia; Editing by Ruth Pitchford)
