(Updates with Polish central bank, new dealer and analyst
comments)
BUDAPEST, Aug 27 (Reuters) - Central European currencies
were mostly steady against the euro in late trade on Wednesday
but the zloty remained weaker even though the Polish central
bank's comments after its meeting retained a hawkish bias.
A tax-cutting plan announced by Hungary's minority
government also weakened the forint for some time.
Russia's conflict with Georgia and gloom over the global
economy, including the European Union, can maintain pressure on
Central European assets.
But currencies in the region continue to watch the dollar's
movements against the euro, market participants said.
"All in all, (currencies in the region) are in a relatively
tight range... if the euro/dollar moves significantly, we will
return to tracking it," one Budapest-based dealer said.
The zloty <EURPLN=> eased 0.3 percent to 3.33 to the euro
even before Poland's central bank said that it left its rates
unchanged as expected, and the currency closed at those weaker
levels despite hawkish comments from the bank.
Rate hikes were a key factor earlier this year which helped
Central European currencies hit record highs, but expectations
for rate cuts have strengthened in the past weeks, and the Czech
central bank surprised by reducing its rates early this month.
The Polish central bank's comments after its meeting showed
that it remains concerned over inflation, has kept its
tightenining bias, and Governor Slawomir Skrzypek said he was
concerned with the Georgian conflict and its impact on markets.
But it also noted that slowing economic growth can help
reduce inflation, analysts said.
"The overall tone is less hawkish than in the first half of
the year," said Maria Hermanova, analyst at Ceska sporitelna.
"Our baseline scenario assumes one last rate hike in September,
but the probability of postponement to October is rising."
Hungary's forint <EURHUF=> fell 0.4 percent against the
euro after Prime Minister Ferenc Gyurcsany said he would resign
if parliament voted down his new plans to cut taxes by up to
1,200 billion forints ($7.50 billion) in coming years.
But the currency later pared its losses to trade at 236.01
at 1500 GMT, weaker by only 0.05 percent.
"It's too early to get scared ... there are plenty of
unanswered questions (about the budget plans and parliament
backing)," one dealer said.
************************MARKET SNAPSHOT************************
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.56 24.21 -1.45% +7.31%
Polish zloty <EURPLN=> 3.33 3.32 -0.3% +7.51%
Hungarian forint <EURHUF=> 236.01 235.9 -0.05% +6.66%
Croatian kuna <EURHRK=> 7.16 7.19 +0.42% +2.27%
Romanian leu <EURRON=> 3.54 3.52 -0.57% +1.12%
Serbian dinar <EURRSD=> 76.22 76.9 +0.88% +3.22%
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -9 basis points to -6bps over bmk*
5-yr T-bond CZ5YT=RR -8 basis points to +3bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +31bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +466bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +441bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +371bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1651 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Writing by Sandor Peto; editing by Stephen Nisbet)
