(Adds details, fixed income)
PRAGUE, Aug 27 (Reuters) - Emerging European currencies held
steady against the euro on Wednesday ahead of a Polish interest
rate decision, with investors looking for clues to whether rates
have peaked in the region's largest economy.
Poland's central bank is widely expected to keep rates on
hold this month, and a growing number of analysts say monetary
policy tightening there may have ended [], removing
one of the factors that has driven the zloty's surge this year.
Hungary's central bank kept rates unchanged on Monday, while
the Czech bank was first in the region to loosen policy at the
start of August as the balance of policymakers' concerns moved
from inflation to flagging economic growth.
Dealers also said the dollar, which pulled back from a 2008
high overnight, could be a driver for currencies on Wednesday.
"There has been some retreat in the dollar, which seems to
be lending some support to the region's currencies early on," a
Budapest dealer said.
"But we have to keep in mind that this is still August and
flows are rather low," the trader said.
Regional currencies hit record highs in July on the back of
expectations of further rises in interest rates. With those
hopes diminishing, along with a resurgent dollar, currencies
have slipped since.
The dollar grows more attractive relative to regional
currencies as fears of a deeper slowdown in the euro zone, the
region's main trade partner, gain pace.
On Wednesday, the zloty <EURPLN=> nudged lower to 3.324 a
euro by 0743 GMT, from Tuesday's close of 3.323.
The Hungarian forint <EURHUF=> firmed to 235.1, or 0.2
percent, and the Czech crown <EURCZK=> edged up to 24.535 a
euro, from 24.545.
Elsewhere, the Romanian leu <EURRON=> was up 0.1 percent at
3.539 per euro, and the Serb dinar <EURRSD=> and Croatian kuna
<EURHRK=> were little changed at 76.56 and 7.16.
In Poland, bonds held steady with investors waiting for the
central bank's policy statement later in the day.
"The market is likely to eye closely the statement after the
decision, although no one really expects a total change of the
outlook, as inflation in Poland is still much above the central
bank's target," said a dealer at Warsaw-based bank.
*************************MARKET SNAPSHOT************************
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.535 24.545 +0.04% +7.4%
Polish zloty <EURPLN=> 3.324 3.323 -0.03% +7.68%
Hungarian forint <EURHUF=> 235.120 235.510 +0.17% +7.01%
Croatian kuna <EURHRK=> 7.160 7.164 +0.06% +2.27%
Romanian leu <EURRON=> 3.539 3.543 +0.11% +1.15%
Serbian dinar <EURRSD=> 76.561 76.600 +0.05% +2.79%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to 4bps over bmk*
5-yr T-bond CZ5YT=RR +2 basis points to +13bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +33bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +222bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +207bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +189bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +474bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +452bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +375bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0943 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Mike Peacock)
