* Investors keep eye on Romania court ruling on austerity
* Positive result mostly priced-in, surprise would hit leu
* Global risk trade still drives region
PRAGUE, June 24 (Reuters) - The leu edged up on Thursday to
gain with other emerging European currencies benefitting from a
weaker dollar, but investors kept a wary eye on a court ruling
later in the day over austerity measures key for Romanian aid.
The Romanian government has already survived a parliamentary
no-confidence vote over the tough public sector pay cuts it
plans, and investors have mostly priced in a positive ruling at
the constitutional court. []
But the court has a history of overturning reform packages,
making it more difficult for governments to keep public spending
in check. A court rejection of the cost-saving measures would
further postpone International Monetary Fund aid, increasing
financing risks.
"All we can do for now is expect the ruling," said one
trader in Bucharest.
"If the cuts pass then the leu's firming should be rather
modest, as the market has priced in that the measures will pass.
Should they be rejected, we will likely see sudden
depreciation."
The leu <EURRON=> inched up 0.1 percent to 4.222 to the euro
by 0730 GMT, underperforming a 0.3 percent rise in the Polish
zloty <EURPLN=> and 0.2 percent gain for Hungary's forint
<EURHUF=>.
The Czech crown <EURCZK=> rose a touch to 25.681 to the
euro. The unit eked out gains on Wednesday amid poor risk
appetite and has seen weakening capped at the 25.800 level.
Currencies were helped by a weaker dollar after the U.S.
Federal Reserve said the economic recovery was faltering,
hurting the U.S. currency. []
Shares were also mixed, with Budapest <> down 0.6
percent and others up in the region. The Thomson Reuters Equity
Emerging Markets Europe Index <.TRXFLDEETU> was up 0.7 percent.
Besides the leu, dealers expected currencies to take cues
from global risk trade. Central European markets have been
rattled recently by growing worries over the region's ability to
rein in budget deficits, especially in IMF-aid recipients
Romania and Hungary.
The fiscal crisis and austerity measures have led to more
cautious central bank policies, and have made many analysts push
back expectations for rate hikes in the stronger economies like
Poland and the Czech Republic.
The Czech central bank left its benchmark rate on hold at an
all-time low of 0.75 percent as expected and most analysts
expect the first hike in the first part of 2011. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.681 25.695 +0.05% +2.48%
Polish zloty <EURPLN=> 4.07 4.08 +0.25% +0.84%
Hungarian forint <EURHUF=> 280.14 280.67 +0.19% -3.49%
Croatian kuna <EURHRK=> 7.183 7.191 +0.11% +1.76%
Romanian leu <EURRON=> 4.224 4.228 +0.09% +0.32%
Serbian dinar <EURRSD=> 103.92 104.04 +0.12% -7.74%
All data taken from Reuters at 0927 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet)
