* Leu hits another all-time low vs euro, then rebounds
* Hungary forint near all-time lows vs Swiss franc
* Analysts say central banks may intervene to support units
* Poland, Romania rate decisions Weds may provide direction
(Updates prices, adds Hungary central bank)
By Sam Cage and Jason Hovet
BUCHAREST/PRAGUE, June 29 (Reuters) - Investor concerns over
the speed of recovery in emerging Europe helped knock the
Romanian leu to a record low against the euro and the Hungarian
forint to an all-time low against the Swiss franc on Tuesday.
Central European governments have struggled to convince
investors they can keep fiscal consolidation plans on track amid
fragile economic recoveries and keep a debt crisis in the euro
zone from spreading.
A nearly 5 percent drop versus the euro for the leu and 4
percent loss for the forint in June has raised chances central
banks could intervene to stop the weakening, analysts said.
Bucharest dealers said this threat of intervention helped
limit some losses in the leu on Tuesday after a sharp 2 percent
fall in the previous session when investors perceived the
government's plans to hike value added tax as a short-term
budget solution.
Finance Minister Sebastian Vladescu said on Tuesday the
International Monetary Fund will discuss Romania's 20 billion
euro aid package on Friday, calming fears the meeting could be
delayed. []
"This is very good news as the wage cuts can take effect
after July 1. If they are delayed, less revenue comes in for
2010," said Barclays Capital economist Daniel Hewitt. "As far as
I can see this puts them on track for the IMF tranche."
But the leu attacked new lows later in the session, trading
on the weak side of 4.40 to the euro. By 1353 GMT the leu
<EURRON=> bid 0.8 percent down on the day against the euro.
The forint <EURHUF=> fell 0.9 percent against the euro to
lows hit at the start of June. Poland's zloty <EURPLN=> fell 0.7
percent and the Czech crown <EURCZK=> edged 0.3 percent lower.
Bucharest shares <> fell 3.6 percent to lead the region.
Hungary's forint remained close to all-time lows versus the
Swiss franc <CHFHUF=>, raising concerns over the country's large
stock of franc-denominated debt.
Hungarian bond yields rose a few basis points on the day, a
far cry from the extreme jumps seen this month. Considering the
market's concerns about the forint-franc relationship, the cost
of the country's debt stayed low, a Budapest bond dealer said.
POLICY WATCH
Asked if the Swiss franc's recent gains would have any
consequences for monetary policy, Hungary's central bank (NBH)
Deputy Governor Julia Kiraly said in an e-mailed response to
Reuters questions:
"Monetary policy is guided by the inflationary outlook and
international risk assessment/perception, not by temporary
exchange rate movements."
Cheuvreux analyst Simon Quijano-Evans said in a earlier note
that it appeared markets may push policymakers into action.
"Indeed, we need to see some sort of concerted action from
monetary authorities on the FX market. Even one central bank's
action -- ie Romania or Hungary -- would help reduce the
spillover effects," he said.
Romania's central bank has intervened on markets in the past
year to stop excessive weakening or firming, dealers say.
The cost of insuring the sovereign debt of Romania, Hungary
and Bulgaria rose, according to CMA DataVision.
Investors are eyeing two interest rate decisions on
Wednesday, likely to be of greater interest than usual.
It will be the first time Poland's central bank releases its
inflation projection and markets will watch comments from new
governor Marek Belka at his first meeting. []
Romania's central bank is now seen leaving interest rates
unchanged, rather than cutting, due to inflation concerns
following the decision to raise VAT. []
Newly-appointed Czech central bank member Kamil Janacek said
on Tuesday the bank's monetary policy is well set and rates at
the current level are not hurting the economy. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.784 25.716 -0.26% +2.07%
Polish zloty <EURPLN=> 4.17 4.141 -0.7% -1.58%
Hungarian forint <EURHUF=> 288.17 285.54 -0.91% -6.18%
Croatian kuna <EURHRK=> 7.195 7.195 0% +1.59%
Romanian leu <EURRON=> 4.395 4.36 -0.8% -3.59%
Serbian dinar <EURRSD=> 104.6 103.92 -0.65% -8.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 134bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +159bps over bmk*
10-yr T-bond CZ9YT=RR +8 basis points to +157bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +436bps over bmk*
5-yr T-bond PL5YT=RR +10 basis points to +409bps over bmk*
10-yr T-bond PL10YT=RR +9 basis points to +348bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +650bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +602bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +510bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1544 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Editing by Sonya Hepinstall)
