* Polish rate cut 25 bps, as expected, does not stir mkts
* HUF gains on wider carry trade
* ECB's record loan to banks also helps region's FX
* OECD forecasts Poland debt close to constitutional limit
(Adds Polish rate decision, new comments, updates markets)
By Marton Dunai
BUDAPEST, June 24 (Reuters) - Hungary's forint led gains
among central European currencies on Wednesday, benefiting from
a perceived improvement in carry trade as Poland cut rates as
expected and the ECB gave record loans to banks, traders said.
The National Bank of Poland announced the expected 25 basis
point cut at 1210 GMT, which did not immediately affect markets
as the move was already priced in.
"Now we're waiting for the news conference and the central
bank's Monetary Policy Council statement afterwards," one
Warsaw-based dealer said.
"If the council suggest ending of an easing bias, it may
support the zloty slightly," he said.
The forint gained 1.4 percent by 1343 GMT, outpacing
regional peers. The Czech crown added 0.4 percent, the zloty 0.3
percent and the leu 0.2 percent. Stocks also gained, also led by
Budapest, where the BUX added 2.1 percent.
"(It's) carry trade," a dealer in Budapest said. "The Polish
central bank... cut rates, while there is no rate cut in
Hungary, making the forint even more attractive and you can
notice that in the forint/zloty cross," a Budapest-based
currency dealer said.
Other dealers said there were major HUF buyers present in
the market, playing on the carry.
The National Bank of Hungary kept its rates unchanged at 9.5
percent on Monday, the highest in the European Union along with
Romania's. [] But Romania is expected to cut rates
next week, as is the Czech Republic on Thursday.
In the latest move to get liquidity flowing, the European
Central Bank lent banks 442.24 billion euros at a flat rate of 1
percent. []
"The ECB loan is helping (European) emerging markets... the
forint benefits the most because it has been perhaps the most
volatile currency in the region recently," another dealer said.
POLISH CPI, GDP EYED
The market remained watchful of the new inflation projection
by the Polish central bank, the inflation path and gross
domestic product, expected for a news conference at 1400 GMT.
"In the event of a very pessimistic GDP path... one could
expect downward pressure on the zloty towards 4.60 per euro,"
Bank BPH wrote in a note.
Poland could see its economy contract by 1.5 percent this
year, contrary to government estimates of slight growth, and
inflation pressures are beginning to ease, Capital Economics
said in a note after the rate meeting.
"We now expect interest rates to trough at 3 percent," it
added.
Earlier in the day, markets shrugged off a new OECD forecast
warning that Poland's debt could approach the Maastricht and
Polish constitutional limit of 60 percent of gross domestic
product. []
The OECD also said that it did not expect Hungary's central
bank to lower its key rate before 2010 from the current 9.5
percent. Analysts expect rates at 8.5 percent by year-end.
In Prague, dealers and analysts expected some stabilisation
after a sharp, 3 percent gain by the crown in the past week that
made it one of the best performing currencies.
"It was a significant move and now the area (of 26.30-40 to
the euro) represents strong resistance," said Jan Vejmelek, head
of economy and strategy research at Komercni Banka.
Romania's leu firmed slightly on the back of a weaker dollar
and a rebound in stocks. Romania is seen cutting 50 basis points
from its 9.5 percent key rate next week, followed by careful
further easing.
------------------MARKET SNAPSHOT----------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.084 26.2 +0.44% +2.56%
Polish zloty <EURPLN=> 4.533 4.545 +0.26% -9.22%
Hungarian forint <EURHUF=> 277.88 281.77 +1.4% -5.16%
Croatian kuna <EURHRK=> 7.305 7.292 -0.18% +0.82%
Romanian leu <EURRON=> 4.224 4.233 +0.21% -4.96%
Serbian dinar <EURRSD=> 93.916 93.423 -0.52% -4.72%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +31 basis points to 141bps over bmk*
4-yr T-bond CZ4YT=RR -12 basis points to +166bps over bmk*
8-yr T-bond CZ8YT=RR +16 basis points to +294bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +382bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +327bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +296bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -17 basis points to +811bps over bmk*
5-yr T-bond HU5YT=RR -53 basis points to +764bps over bmk*
10-yr T-bond HU10YT=RR -47 basis points to +681bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1542 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaux, writing by Marton Dunai;
Editing by Stephen Nisbet)
