(Recasts with new prices, comments.)
By Sandor Peto
BUDAPEST, Dec 15 (Reuters) - Central European currencies
were mixed on Monday as a rise of equities in Asia and Europe
gave some support, while Poland's zloty fell amid concerns that
investors may close some options positions and sell the zloty.
Hungary's forint was relatively stable, while Romania's
leu<EURRON=> rebounded from falls caused by domestic political
uncertainty and dealers suspected central bank intervention.
Despite falls by the zloty and the Czech crown<EURCZK=>, the
region's markets regained some composure after a sharp weakening
last week as equity markets gained on hopes that the ailing U.S.
auto industry will receive a bailout.
Hungary's forint <EURHUF=> firmed 0.26 percent to the euro
to 265.96 by 1056 GMT, the zloty<EURPLN=> weakened 0.81 percent
to 3.987, the Czech crown <EURCZK=> eased 0.6 percent to 26.17,
while Romania's leu <EURRON=> firmed 0.23 percent to 3.928.
Poland's main equity index, the WIG<> rose by one
percent, Prague's PX<> gained 1.7 percent and Budapest's
BUX<> was up by 0.9 percent.
Polish central bank governor Slawomir Skrzypek said the
economy needed a deeper then 25 basis point interest rate cut,
and expectations for rate cuts in the region where economic
growth is slowing down weighed on currencies.[]
"But the main cause of why the zloty is underperforming the
region is the options," one Warsaw-based dealer said, adding
that the market was uncertain over the size of positions to be
closed in the short term, generating pressure on the zloty.
The leu changed direction after initial falls even though
the designated Romanian prime minister Theodor Stolojan gave up
his nomination, raising the prospect of political
instability.[]
"The central bank has moved into the market, apparently by
indirectly selling euros," one dealer said.
The crown touched its weakest levels in nearly eight weeks,
while the Czech government bond market was quiet ahead of the
central bank's meeting on Wednesday where the bank is expected
to cut its interest rates by 50 basis points to 2.25 percent.
"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.
Polish bonds also moved sideways in quiet trade.
"The Polish papers strengthened last week, so this week
we'll likely observe profit taking," said a dealer at
Warsaw-based bank."
"On the other hand we have CPI and wages data today and if
consumer prices is above market expectations (3.8 in a Reuters
poll), bonds may strengthen," he said.
Hungary's central bank (NBH) is also expected to cut
interest rates at its meeting on Dec. 22. Hungarian government
bonds eased slightly, but market activity remained low.
The NBH, which bought government bonds worth 243 billion
forints in the past months at weekly auctions, held no auction
on Monday in the second week in a row, and may not return into
the market this year, traders said.
Croatia's kuna<EURHRK=> was virtually flat.
"We see the kuna losing some ground to the euro this week,
but the depreciation pressures will not be too strong amid still
solid demand for the kuna and intensified state borrowing at
home", Raiffeisen Bank said in a weekly note.
Analysts at a local brokerage said they expected the kuna to
trade between 7.20 and 7.25 to the euro at the start of 2009,
compared to around 7.17 currently.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.17 26.015 -0.6% +1.23%
Polish zloty <EURPLN=> 3.987 3.955 -0.81% -10.73%
Hungarian forint <EURHUF=> 265.96 266.66 +0.26% -5.18%
Croatian kuna <EURHRK=> 7.174 7.182 +0.11% +2.08%
Romanian leu <EURRON=> 3.928 3.937 +0.23% -9.71%
Serbian dinar <EURRSD=> 87.928 87.828 -0.11% -11.64%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +8 basis points to 168bps over bmk*
5-yr T-bond CZ5YT=RR +6 basis points to +125bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +8 basis points to +343bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +287bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +242bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -38 basis points to +730bps over bmk*
5-yr T-bond HU5YT=RR -49 basis points to +672bps over bmk*
10-yr T-bond HU10YT=RR +10 basis points to +492bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1156 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)
