* Czech cbank leaves rates unchanged, crown jumps
* Hungary sells 50 bln HUF of bonds, Romania debt sale due
(Adds Czech cbank, Hungary auction)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Nov 5 (Reuters) - The Czech crown firmed
around half a percentage point after the central bank left rates
flat at a record low of 1.25 percent on Thursday, with some
investors unwinding positions built on expectations for a cut.
Earlier this week, the crown gained some ground as investors
had closed short positions in anticipation for a flat rate
decision due to improving economic signs and recent currency
weakness.But the market was still split ahead of the move.
The crown, which traded 0.7 percent up at 25.855 per euro at
1230 GMT, had fallen back around 4 percent in the past month,
after policymakers signalled they were unhappy with a stronger
currency. []
"Leaving rates unchanged could create upward pressure on the
crown," said Michal Brozka of Raiffeisen Bank. "But a more
significant strengthening will be prevented by the possibility
that rates could still be lowered in the near future or that
there could be an intervention against the crown."
The zloty <EURPLN=> was a touch weaker as the region was
pressured by dollar firmness. Markets got a jolt on Wednesday
after Poland said it wants to cut the amount of money it
transfers to private pension funds in a move to put a lid on
rising public debt. []
The Hungarian forint <EURHUF=> edged up 0.2 percent, with
investors seeing some signs of improvement for Hungary's
hard-hit manufacturing sector. []
The country sold all the government bonds offered at its
auctions on Thursday, but a rise of about 35 basis points in
yields from a previous tender and a lower amount of bids signal
concern that demand may tighten in the rest of the year.
Hungarian yields -- which have been sliced in half in the
past half-year, recently supported by expectations for further
monetary easing -- were unmoved by the results.
Investors there still expect further cuts after minutes from
last month's meeting showed almost half of the board wanted a
deeper cut than the 50 basis point reduction to 7 percent.
[]
ROMANIA'S PROBLEMS
In Romania, the leu <EURRON=> fell back near the key 4.3 per
euro support level a day after the proposed cabinet of Prime
Minister designate Lucian Croitoru failed to gain parliament's
approval. []
Romania's president has said he will pick the next prime
minister from his political camp, but did not rule out an
interim cabinet staying until after a Nov. 22 presidential poll.
Analysts expect uncertainty to remain high until the outcome
of the second round of the poll on Dec. 6, but the leu will
likely remain within a narrow range as markets fear central bank
intervention to keep it below 4.35 per euro.
Currencies have been knocked back in the past month, with
rising government deficits, political uncertainty and some
remaining chances to cut interest rates weighing.
But a Reuters poll on Tuesday showed analysts expect
currencies to return to firming by 2010 and post solid gains in
the next 12 months, led by the zloty. []
Romania tenders 950 million lei in 5-year bonds later on
Thursday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.855 26.029 +0.67% +3.47%
Polish zloty <EURPLN=> 4.254 4.249 -0.12% -3.27%
Hungarian forint <EURHUF=> 275.7 276.12 +0.15% -4.41%
Croatian kuna <EURHRK=> 7.268 7.277 +0.12% +1.33%
Romanian leu <EURRON=> 4.297 4.292 -0.12% -6.58%
Serbian dinar <EURRSD=> 93.642 94.163 +0.56% -4.44%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -13 basis points to 90bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +96bps over bmk*
10-yr T-bond CZ10YT=RR -4 basis points to +86bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +534bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +475bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +417bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1430 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Writing by Jason Hovet and
Marius Zaharia; Editing by Ruth Pitchford)
