(Recasts with zloty fall, adds details)
BUCHAREST, Dec 29 (Reuters) - Romania's leu fell to its
lowest level in four years against the euro and the Polish zloty
dropped around 2 percent in thin trade on Monday.
By 1030 GMT, the leu <EURRON=> fell as low as 4.0083 per
euro, a fresh four-year low, down almost 1 percent on the day.
"There were very few bids, but some foreigners were testing
the 4 level, betting on more economic trouble for Romania," said
one dealer with a foreign bank, adding that he expected the
central bank to intervene.
Romania is seen as one of the most vulnerable economies in
the region due to its hefty current account deficit.
The Polish zloty <EURPLN=> was down 1.8 percent at 4.158 per
euro, with dealers saying the currency continued to suffer the
backwash from corporates that hedged the wrong way in the summer
when the unit was firming.
"Low liquidity is the main problem," said Piotr Bujak,
economist at BZ WBK in Warsaw. "But maybe it is the effect of
options. When positions are closed in an illiquid market,
currencies' level changes significantly."
The Hungarian forint <EURHUF=> fell 0.3 percent at 266.52
per euro, while the Czech crown <EURCZK=> lost 0.8 percent,
trading at 26.578 per euro.
Regional currencies have been battered over the last months
of the year by fears recession will spread east from the euro
zone.
Last week, Poland cut borrowing costs by a
more-than-expected 75 basis points and Hungary cut rates by 50
basis points.
On Monday, Czech Central Bank Governor Zdenek Tuma was
quoted as saying he saw room to cut rates by as much as 2.25
percentage points, which is the current level of Czech rates
[].
Romania is next to join the trend, analysts say, with easing
seen either in January or in February.
In other trade, the Serbian dinar <EURRSD=> was 0.3 percent
down at 87.46 per euro, while the Croatian kuna <EURHRK=> was
down 0.4 percent at 7.335 per euro.
"The market seems to be reacting to announcements that the
central bank would dip into the currency reserves to finance
payment of foreign debt," one dealer in Croatia said.
"I see the kuna weakening further this week and the central
bank probably intervening once the kuna reaches the 7.40 level."
Regional fixed income markets were quiet in holiday trade,
with yields generally steady.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.578 26.37 -0.79% -0.31%
Polish zloty <EURPLN=> 4.103 4.084 -1.81% -15.48%
Hungarian forint <EURHUF=> 266.52 265.8 -0.27% -5.41%
Croatian kuna <EURHRK=> 7.335 7.306 -0.4% -0.12%
Romanian leu <EURRON=> 4.0083 3.963 -0.93% -11.59%
Serbian dinar <EURRSD=> 87.46 87.237 -0.26% -11.05%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -6 basis points to 168bps over bmk*
5-yr T-bond CZ5YT=RR +2 basis points to +157bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +121bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +344bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +291bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +247bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +34 basis points to +789bps over bmk*
5-yr T-bond HU5YT=RR +32 basis points to +726bps over bmk*
10-yr T-bond HU10YT=RR +26 basis points to +537bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1220 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Marius Zaharia;
editing by ...)
