(Updates prices, adds fixed income details)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, Dec 10 (Reuters) - The Polish zloty fell
Wednesday on corporate foreign exchange hedging concerns and the
Czech crown slid following weak growth data.
Hungarian bond yields fell after debt issuance plans for
2009 signalled the government will sell less forint bonds than
expires.
The zloty <EURPLN=> fell 0.6 percent verses the euro to
3.953 on concerns that Polish companies were overexposed to hard
currency hedging.
Polish officials and some companies have said the corporate
sector may have to write off millions of euros after hedging
contracts went the wrong way due to a fall of 25 percent in the
zloty's rate against the euro since August.
The zloty had appreciated rapidly through the first half of
the year, prompting exporters to hedge against a further rise
through option contracts. Those deals are now losing money due
to the zloty's decline.
"What drives the zloty losses now are the fears that the
company FX options is a bigger problem than it now seems. I
think it's a one way street for now and we may very well see
euro at 4 zlotys in a couple of days," one trader said.
In the Czech Republic, data showed the economy there grew by
4.2 percent in the third quarter, below a 4.7 percent flash
estimate released in November. The Czeck crown <EURCZK=> traded
0.3 percent lower, at 25.83 per euro.
"Thanks to the downward revision the likelihood of a
significant cut in interest rates is rising," said David Marek,
chief economist at Patria Finance.
In Hungary, central bank governor Andras Simor said the
central bank is likely to meet its inflation target next year,
but it will be cautious over cutting interest rates further due
to weakening pressures on the forint [].
The forint <EURHUF=> firmed slightly after Simor's
statements, but weakened again towards the end of the session,
to trade 0.4 percent lower.
Romania's president Traian Basescu nominated respected
ex-World Bank economic expert Theodor Stolojan as prime
minister, while his Democrat-Liberal Party continued talks with
rival leftists on forming a coalition [].
Dealers said the leu <EURRON=> was unaffected by the news.
At 1500 GMT, it traded at 3.884 per euro, flat from Tuesday.
"In theory, it sounds good, it could be perceived
positively, because Romania shows it has the will to fight the
crisis, as everything (coalition talks, prime minister nominee)
has been done fast," one dealer said.
"But for now, the nomination is market neutral because
foreign players will remain cautious, they will wait for the
policies the government will announce."
In other trade, the Serbian dinar <EURRSD=> was unchanged
from Tuesday.After several days of buying euros from banks to
tame dinar's gains, the central bank called a fixing session on
Wednesday and sold 12.4 million euros at 85.00 per euro.
In fixed income markets, Hungarian bond yields dropped by
about 10-15 basis points after state debt agency AKK announced
next year's financing plans, which will rely substantially on
October's IMF/EU loan. [].
"Bids dropped by about 10-15 points after the announcement
but there are no offers," one trader said.
Polish bond yields also rose slightly from morning levels.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.83 25.743 -0.34% +2.52%
Polish zloty <EURPLN=> 3.953 3.929 -0.61% -9.79%
Hungarian forint <EURHUF=> 263.8 262.69 -0.42% -4.33%
Croatian kuna <EURHRK=> 7.179 7.183 +0.06% +2.01%
Romanian leu <EURRON=> 3.884 3.88 -0.1% -8.49%
Serbian dinar <EURRSD=> 84.343 84.393 +0.06% -7.09%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +5 basis points to 147bps over bmk*
5-yr T-bond CZ5YT=RR 0 basis points to +137bps over bmk*
10-yr T-bond CZ9YT=RR 0 basis points to +106bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +323bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +275bps over bmk*
10-yr T-bond PL10YT=RR +10 basis points to +242bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -46 basis points to +740bps over bmk*
5-yr T-bond HU5YT=RR -52 basis points to +693bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +521bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1700 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz
and Marius Zaharia, Editing by Toby Chopra)
