* Polish zloty reverses gains despite good manufacturing
* Romanian leu weakens on dovish cbank policy
* Czech, Hungarian PMI dip but still strong
(Adds bonds, stocks, updates prices)
By Luiza Ilie
BUCHAREST, April 1 (Reuters) - Emerging European currencies
were mixed versus the euro on Friday, with the Polish zloty
erasing early gains despite rising price pressures and the
Romanian leu falling after interest rates were kept on hold.
The Polish zloty has bounced around in recent sessions with
investors torn between expectations of higher interest rates and
concerns that external shortfall revisions may show it
increasingly burdened by a sizable "twin deficit".
Polish manufacturing PMI data for March beat expectations,
pointing to a strengthening economy and also rising price
pressures ahead of a central bank rate-setting meeting next
week. []
A Reuters poll indicated earlier this week 23 out of 29
analysts see the central bank increasing its benchmark rate by a
quarter point to 4 percent. []
"As long as there is uncertainty regarding quality of
balance of payments statistics, investors are likely to remain
cautious and room for near-term zloty appreciation will be
probably smaller than previously expected," Citibank said in a
research note.
At 0930 GMT, the zloty <EURPLN=> was bid at 4.031 per euro,
reversing earlier gains and flat on the day. Polish bond yields
rose on the short-end of the curve compared with Thursday
afternoon on expectations of an April rate hike.
Elsewhere in the region, March PMI data dipped slightly in
Hungary and the Czech Republic, but the levels were still high
and indicated strong industrial sectors. []
The Czech crown <EURCZK=> was 0.2 percent higher on the day
while the 10-year yield spread over the German bund tightened,
as Czech inflation is considerably lower that in the euro zone.
Stocks also rose on the day across the region, led by
Budapest's <> and Warsaw's <>.
IMPROVING HUNGARIAN FUNDAMENTALS
The Hungarian forint <EURHUF=> was flat, although analysts
have said the forint was likely to find support in improving
economic fundamentals. Yields rose slightly from Thursday.
"On balance, we tend to prefer the forint versus the zloty
at this point also on the mere fact that fourth quarter current
account data in Hungary came in at triple the expectations
yesterday," Unicredit said in a morning note.
In Romania, the leu <EURRON=> was down 0.3 percent on the
day, extending losses recorded in the previous session after the
central bank left interest rates unchanged at 6.25 percent but
was less aggressive than expected in its accompanying remarks.
The bank cut minimum reserve requirements on FX loans to 20
percent from 25 percent to ease lending, a step which should
help Romania's fledgling economic recovery. []
"Contrary to our expectations there was no hawkish tone in
the press release," said ING's Nicolaie Alexandru-Chidesciuc.
"We see this as a first signal that inflation will be high in
Romania, even higher than what we expect currently."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.45 24.51 +0.25% +2.25%
Polish zloty <EURPLN=> 4.033 4.03 -0.07% -1.86%
Hungarian forint <EURHUF=> 266.01 265.92 -0.03% +4.5%
Croatian kuna <EURHRK=> 7.373 7.373 0% +0.09%
Romanian leu <EURRON=> 4.137 4.121 -0.39% +2.32%
Serbian dinar <EURRSD=> 103.4 103.4 0% +2.44%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to -5bps over bmk*
7-yr T-bond CZ7YT=RR +2 basis points to +62bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +68bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +320bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +309bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +457bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +427bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +379bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1210 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus; Writing by Luiza Ilie; editing
by Patrick Graham/Toby Chopra)
