(Refiles to clarify penultimate paragraph)
* Czech c.banker says no need for pan-regional aid package
* Crown close to predicted levels, no drama for policy
* Hedging losses not big related to export volumes
By Jan Lopatka
PRAGUE, March 17 (Reuters) - There is no need for an
economic aid package that targets all central and eastern
European economies because some of them do not need it, Czech
central bank Vice-Governor Miroslav Singer said on Tuesday.
Some analysts and policymakers in the region have repeatedly
called for a coordinated aid package for all central and east
European countries, most of which have been hit by steep
currency falls and a sharp downturn in growth.
"It is not clear to me why there should be coordination of
aid to countries that do not need any aid," Singer said in
response to emailed questions.
"There are even countries in the region, like the Czech
Republic, that themselves provide aid to others -- Latvia in our
case. Of course there are countries that have big problems, and
we need to help them, but when considering how to do it, it is
necessary to look at their concrete situation."
The Czechs, who have relatively little foreign debt and
current account deficit, have been leading calls for markets to
differentiate among countries according to their varying
economic fundamentals.
There has been some evidence investors have begun to treat
them differently of late, with the crown currency recouping from
losses and trading 0.7 percent up since the beginning of this
year, at 26.59 to the euro on Tuesday <EURCZK=>.
It has outperformed its peers, and the region's next best
performer is the Romanian leu <EURRON=>, down 6.5 percent.
Some analysts have said differentiation would not work in
case of a speculative attack, and called for an aid package for
the region which individual countries could tap from as needed.
Serbia's central bank Governor Radovan Jelasic urged a
coordinated approach in a Financial Times article on Tuesday,
saying funds should start flowing in quickly.
But Singer said a quick inflow of euros into the Czech
Republic could cause trouble.
"I am afraid it would only lead to a not too much desired
deviation of the crown from its trajectory in the direction of a
stronger exchange rate, which would be forcing us into a
corresponding monetary policy reaction," he said.
The central bank does not target the currency level, but the
country's highly open economy makes the exchange rate an
important factor in setting interest rates.
Singer said the crown was now relatively close to the
central bank's predictions -- its quarterly model sees the
average 2009 crown rate at 25.80 -- and that it "implies no
drama" for monetary policy.
Singer and Governor Zdenek Tuma warned last month when the
crown dropped to as low as 29.69 that the market should not
expect any more rate cuts and rather prepare for hikes.
The central bank has slashed the main interest rate by 200
basis points since last August to 1.75 percent.
HEDGING LOSSES NOT HUGE
Singer said losses in the corporate sector from exporters'
hedging contracts, a problem in neighbouring Poland, were not
large compared with overall export volumes.
He said information from banks showed exporters had been
exposed to 50-60 billion crowns ($2.46 billion) in losses from
currency hedging contracts when the crown weakened to 28-29 per
euro.
But this was only a fraction of about 2.2 trillion crowns in
annual export revenue and was outweighed by the fact that a
weaker currency raised crown receipts from exports. In terms of
value added, that effect would reach about 120 billion crowns,
before adjustments for falling export volumes at the 28-29 crown
exchange rate.
He said the numbers were lower now, as the crown has firmed
closer to the original hedging levels around 25 crowns.
(Editing by Andy Bruce)
