BUDAPEST, Dec 15 (Reuters) - Central European currencies
firmed slightly in early trade on Monday, ending last week's
weakening as equities in Asia and Europe gained on to hopes that
the ailing U.S. auto industry will receive a bailout.
"The Dow closed firmer, Asian bourses are in the positive,
the sentiment is altogether better, which causes a slight
(positive) correction but nothing big," one Budapest-based
dealer said.
Hungary's forint <EURHUF=> firmed 0.3 percent against the
euro to 265.87, the zloty <EURPLN=> was flat at 3.954, the Czech
crown <EURCZK=> eased 0.25 percent to 26.079, while Romania's
leu <EURRON=> shed 0.28 percent to 3.948.
The main equity indices of the region's bourses --
Budapest's BUX<>, Prague's PX<> and Warsaw's WIG<> --
all firmed by about one percent.
But trading in the region's currency markets was slow and is
expected to remain quiet around the year-end holidays even
though several central banks in the region will hold meetings in
the remainder of the year.
"Interest rate cuts may come, but I don't thing that big
things will happen in the (region's) markets in what is left of
the year," one Budapest-based trader said.
The Czech crown received some initial support from buying by
exporters, but dealers said an economic slowdown in the region
which also affects the Czech Republic could weaken the currency.
"Investors keep looking at the global and Czech slowdown,
and eventually the crown will move weaker but we still see a lot
of good flow from exporters," one dealer in Prague said.
The Czech central bank is expected to cut interest rates by
50 basis points to 2.25 percent on Wednesday. Hungary's central
bank, which will meet on Dec. 22, may also reduce its own rates,
analysts and dealers said.
Hungarian government bonds extended Friday's losses after
weeks of rises.
"But I don't think that there is serious momentum in the
(price fall), there are few sellers," one trader said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.079 26.015 -0.25% +1.58%
Polish zloty <EURPLN=> 3.954 3.955 +0.03% -9.82%
Hungarian forint <EURHUF=> 265.87 266.66 +0.3% -5.15%
Croatian kuna <EURHRK=> 7.182 7.182 0% +1.97%
Romanian leu <EURRON=> 3.948 3.937 -0.28% -10.27%
Serbian dinar <EURRSD=> 87.209 87.828 +0.7% -10.73%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 163bps over bmk*
5-yr T-bond CZ5YT=RR +2 basis points to +120bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +98bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -43 basis points to +727bps over bmk*
5-yr T-bond HU5YT=RR -53 basis points to +662bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +484bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0935 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Sandor Peto;
Editing by Victoria Main)
