(adds detail, fixed income data, updates prices)
BUCHAREST, Jan 14 (Reuters) - Central European currencies
gave up early gains on Wednesday, as a record drop in Czech
industrial output bolstered expectations for further monetary
easing in the region.
Czech industrial output [] plunged a record 17.4
percent in November, adding more evidence regional economies are
suffering from a slowdown in key markets, and dealers said
recent weakening would go on as rates are slashed in response.
At 1020 GMT, the Czech crown <EURCZK=> traded 0.7 percent
weaker from Tuesday's closer at 26.78 per euro, after it firmed
briefly earlier in the session.
"Industrial data are negative news for the Czech crown,"
said Radomir Jac, chief analyst with Generali PPF Asset
Management. "However, even if the crown weakens in reaction to
the data, the message for the central bank is clear: interest
rates must go down further and quite radically."
In Poland, the zloty <EURPLN=> ticked up in early trade with
markets eyeing inflation data due out later in the day, which
are expected to show price growth eased to within the central
bank's target range giving it more leeway to cut interest rates.
"For the FX market this might not be a very positive sign as
it will increase the MPC's willingness to cut rates quickly,"
Commerzbank analysts said in a note.
The global crisis continued to create damage in the region
this year, hitting currencies as recession fears mounted and
central banks began cutting rates to boost economies. A dragging
Russia-Ukraine gas row has also added to concerns.
On Wednesday, a wave of bad news for currencies hit the
region. In Serbia, the central bank governor said he favours a
cut in the key interest rate. [] The dinar <EURRSD=>
weakened slightly after the comments at 92 per euro.
Czech central bank vice-governor said he saw the economy
following the path towards a pessimistic growth forecast of 0.5
percent next year [], while in Hungary, the prime
minister said the economy could shrink by 2-3 percent in 2009,
also worse than previously expected [].
Hungary's forint <EURHUF=> traded virtually steady.
The unit had plunged in recent days due in part to market
speculation the IMF would scold Hungary over a lack of progress
on the terms of an October aid deal. But on Tuesday, the fund's
head Dominique Strauss-Kahn said Hungary was making progress.
Romania's leu <EURRON=> slipped 0.8 percent one day after
dealers said the central bank stepped into the market to stem a
drop to a record low of 4.3530 per euro.
Traders said investors continued to be worried about the
country's budget and current account deficits, but they feared
losses triggered by a potential central bank intervention and
shied away from the key 4.3 level.
"It is the same story, but the difference is that the market
expects the central bank to intervene again if the leu hits
4.3," one dealer said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.922 26.74 -0.68% -0.63%
Polish zloty <EURPLN=> 4.129 4.139 +0.24% -0.34%
Hungarian forint <EURHUF=> 277.41 277.25 -0.06% -5%
Croatian kuna <EURHRK=> 7.332 7.334 +0.03% +0.45%
Romanian leu <EURRON=> 4.269 4.231 -0.89% -5.96%
Serbian dinar <EURRSD=> 92 91.61 -0.42% -2.74%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -14 basis points to 132bps over bmk*
4-yr T-bond CZ4YT=RR -29 basis points to +132bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +111bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +327bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +263bps over bmk*
10-yr T-bond PL10YT=RR -7 basis points to +226bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +17 basis points to +819bps over bmk*
5-yr T-bond HU5YT=RR +20 basis points to +777bps over bmk*
10-yr T-bond HU10YT=RR +25 basis points to +617bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1220 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 Marius Zaharia,
editing by Victoria Main)
