Greece OK's austerity steps
The Greek parliament approved a widely opposed five-year plan of austerity measures, with a second series of measures to implement structural reforms and privatisations expected on Thursday.
Tension during the vote brought a pause to emerging European markets, whose assets have been weighed down recently by the Greek crisis, but investors were relieved and the assets did not move much after the outcome became clear, dealers said.
"There was no real impact from it as markets priced in a successful vote," a dealer said in Budapest. "We rallied on this before so there might be a bit of profit-taking later."
By 1424 GMT the Polish zloty had gained a third of a percent versus the euro, with the Hungarian forint up 0.2 percent and the Czech crown adding 0.1 percent.
The Romanian leu, exposed to Greek news more than the rest of the region as Romania's banking sector has a heavy degree of Greek ownership, lagged peers to drop a third of a percent.
"The leu is weakening on profit-taking after the austerity vote in Greece," one Bucharest-based dealer said. "Buy on the rumour, sell on the fact."
Czech central bank Governor Miroslav Singer said the Greek crisis did not touch all emerging European countries the same way, and that the Czech Republic and Poland were not impacted at all by first-round effects.
Poland's central bank revised balance of payments data that increased the 2010 current account deficit to 4.5 percent of gross domestic product from a preliminary calculation of 3.4 percent.
The revision fell short of expectations by analysts, who had seen the current account deficit reaching 4.7 percent.
"The revision is relatively small, taking into account earlier statements from the central bank's representatives," Bank Handlowy economist Piotr Kalisz said. "The largest revision concerned imports."
"Today's information is a positive surprise but does not change the fact that the deficit is growing, which is bad news for the zloty."In Romania, the central bank left rates flat at 6.25 percent, as expected, and said a prudent stance was warranted as inflation risks persist.
In the Czech Republic, the government approved a pension reform bill, the main part of its plan aimed at beefing up private savings to secure income in retirement, sources told Reuters.
Fixed income dealers said the Greek vote came and went smoothly as expected and yields changed only marginally.
"Longer term, we'll have to see whether they actually implement and carry out these measures, which still carries a significant risk, so we can't sit back and relax," a bond dealer said in Budapest.
The Czech Republic was ready internally to issue euro-bonds but is more likely to do it in the autumn rather than before the summer due to spreads between the Czech and euro-bond curves, the deputy finance minister said.
Copyright Reuters, 2011