* Currencies up on better stocks, bond tenders
* Trade volatile ahead of Easter holiday
* Hungary's cbanker expects deeper recession
(Adds fixed income)
By Dagmara Leszkowicz
WARSAW, April 9 (Reuters) - Hungary's forint and the Polish
zloty led gains in central Europe early on Thursday following
better sentiment caused by gains in global stocks as well as
good results of bonds auctions in the region on Wednesday.
At 0834 GMT Hungary's forint <EURHUF=> was up 0.8 percent
versus the euro, while the Polish zloty was gaining 0.6 percent
and the Czech crown <EURCZK=> and Romanian leu <EURRON> were
around Wednesday's closing levels to the common currency.
The forint firmed early on despite central bank deputy
governor Julia Kiraly saying on public television the economy
could sink into a much deeper recession than earlier believed.
[]
Stocks in the region also opened stronger, but gave up some
ground later and Warsaw WIG20 <> fell almost 1 percent,
while Prague's PX <> and Budapest BUX <> continued to
rise around 1 percent.
Analysts said gains in Asian and U.S. stock markets added
fuel to the currencies' strengthening, but the firming was also
caused by recent bond auctions.
"It was key information for the region as yesterday's tender
showed a big demand for Poland's debt," said Ulrich Leuchtmann,
analyst at Commerzbank.
On Wednesday, Poland's finance ministry sold a total of 2.12
billion zloty worth of its 10-year bonds, with a total demand
reaching 5.26 billion zlotys. []
At the same time Hungary continued to buy back its bonds at
a weekly auction to help its bond market which remains almost
frozen. []
Bonds market in Poland and Hungary also benefited from
Wednesday's tenders with yields falling along the curve and
dealers said general rally is likely to be continued further.
"If this technical squeeze continues, we could go another 50
to 70 points lower," one Budapest-based dealer said. "As long as
no new bonds are issued, the long end of the curve could remain
in demand, and the short end would be supported by the buyback
auctions (of the state debt management agency AKK)."
In the Czech Republic statistics office data showed consumer
prices in March rose 2.3 percent from 2.0 percent last month but
analysts said it was unlikely to affect the forex market.
On the political scene, the country's president Vaclav Klaus
will appoint non-partisan Jan Fisher prime minister on Thursday,
ending a political crisis that toppled the minority centre-right
cabinet. []
SLIGHT ACCELERATION?
Analysts said currencies could extend gains until the Easter
holidays.
"I think currencies will moderately appreciate at least in
the next two days, as investors are not keen to open new
positions before holiday, but trade is likely to be volatile,"
Leuchtmann said.
His view echoed an opinion of analysts at Goldman Sachs that
wrote there's a chance currencies in the region may firm
further.
"Though we see some further currency weakness in the next
three months...we have moved our forecasts stronger across the
board, and now see the possibility of modest appreciation over a
12 month horizon."
The consensus forecasts in a Reuters poll last week also
showed that the region's currencies can firm in 6-12 months
after weakening in the next few months due to the deepening
global crisis. []
Goldman also said it expected the recent differentiation
among currencies in the region to continue, "with the Czech
crown the clear outperformer, the zloty recovering in six months
and the forint recovering to present spot levels in twelve
months."
---------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.6 26.61 +0.04% +0.58%
Polish zloty <EURPLN=> 4.446 4.474 +0.63% -7.44%
Hungarian forint <EURHUF=> 293.06 295.51 +0.84% -10.07%
Croatian kuna <EURHRK=> 7.394 7.431 +0.5% -0.39%
Romanian leu <EURRON=> 4.166 4.166 0% -3.64%
Serbian dinar <EURRSD=> 93.78 93.199 -0.62% -4.59%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +33 basis points to 222bps over bmk*
4-yr T-bond CZ4YT=RR +18 basis points to +242bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +294bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +390bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +336bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +283bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -27 basis points to +858bps over bmk*
5-yr T-bond HU5YT=RR -60 basis points to +780bps over bmk*
10-yr T-bond HU10YT=RR -51 basis points to +649bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0934 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,
Editing by Andy Bruce)
