(Changes dateline, adds Czech cbank rate cuts, comments,
updates prices)
By Sandor Peto and Marius Zaharia
BUDAPEST/BUCHAREST, Dec 17 (Reuters) - Central European
currencies were mixed on Wednesday after the Czech central bank
cut interest rates by 50 basis points to 2.25 percent in the
latest move to bolster growth in the region's emerging markets.
The Czech crown<EURCZK=> moved little after the decision,
which was in line with consensus expectations.
Other rate cuts are expected to follow in the region,
potentially weighing on currencies, but market turnover was
moderate as trade wound down toward the year-end.
The Polish zloty<EURPLN=> extended losses, while Hungary's
forint<EURHUF=> was shielded by a jump by shares on the Budapest
bourse due to news that a Middle East investor wants to build a
seven percent stake in MOL<MOLB.BU>. []
The crown firmed 0.3 percent against the euro by 1257 GMT to
26.27, the zloty shed 0.76 percent to 4.106 and the forint
firmed by 0.5 percent to 266.10. Romania's leu<EURRON=> weakened
by 0.38 percent to 3.949.
Some analysts had speculated the Czech bank could cut by a
more aggressive 75 basis points and dealers said the bank was
likely to reduce rates further at a gradual pace.
"(The decision) was mostly expected," said Dalimil
Vyskovsky, bond trader at Komercni Banka. "I think rates should
head lower, but it will be slow as we have done a lot recently."
Currencies in the region firmed briefly overnight after a
deep rate cut by the U.S. Fed.[].
But analysts said the region remained exposed to the global
credit crunch and recession in their main export markets that
would help trigger further central bank interest rate cuts.
Goldman Sachs said in a note that dollar weakness in the
wake of the Fed rate cut was broadly supportive to emerging
market currencies, but European emerging markets were "the most
vulnerable in a global environment of tight financing".
The Polish and Hungarian central banks are expected to cut
interest rates again next week.
Polish Finance Minister Jacek Rostowski said lower rates
would be the best remedy for the econmomy's slowdown
[], while central bank chief Slawomir Skrzypek said
he could not rule out intervention to stem the zloty's slide.
[]
Hungary's forint remained steady at levels which dealers
said may allow the central bank to deliver its third 50 basis
point interest rate cut in four weeks next Monday, bringing
rates to 10.0 percent.
"Views about the possibility of a cut are split even within
the room," one Budapest-based dealer said.
"I think they can test the market as the forint is stable
between 260 and 270... interest rate swaps, bond yields
corrected upwards recently but are going down again, I think the
majority in the market expects a rate cut."
Central bank governor Andras Simor said the bank had no
exchange rate target, but among market factors the exchange rate
was a key influence on monetary policy decisions.[]
In Romania, the leu traded near a two-month low hit earlier
this week triggered by political uncertainty and dealers said
investors feared central bank intervention.
Meanwhile, Romanian Democrat-Liberals and Social Democrats,
who have forged a governing coalition, meet to discuss the
structure of the cabinet government and share portfolios, after
posting their draft programme on Tuesday [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.27 26.348 +0.3% +0.86%
Polish zloty <EURPLN=> 4.106 4.075 -0.76% -14.04%
Hungarian forint <EURHUF=> 266.1 267.43 +0.5% -5.24%
Croatian kuna <EURHRK=> 7.204 7.189 -0.21% +1.67%
Romanian leu <EURRON=> 3.949 3.934 -0.38% -10.3%
Serbian dinar <EURRSD=> 85.14 85.113 -0.03% -8.1%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 158bps over bmk*
5-yr T-bond CZ5YT=RR +9 basis points to +143bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +117bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -33 basis points to +745bps over bmk*
5-yr T-bond HU5YT=RR -42 basis points to +700bps over bmk*
10-yr T-bond HU10YT=RR +17 basis points to +519bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1357 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets:
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Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
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World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
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(Reporting by Reuters bureaus; Writing by Marius Zaharia;
Editing by Patrick Graham)
