(Changes dateline, updates throughout)
PRAGUE, Nov 10 (Reuters) - Romania's leu fell on Monday
after a Fitch downgrade to "junk" status, while the Czech crown
slipped on expectations of lower interest rates, bucking a pick
up in global appetite for risk and emerging markets.
G20 pledges over the weekend to do what is needed in the
global credit crisis and a $600 billion Chinese spending package
lifted emerging assets, with Warsaw's blue-chip WIG20 <>
stocks index and Prague's PX <> up more than 1 percent.
But Fitch cut Romania two notches to BB-plus, nearly two
weeks after a Standard & Poor's downgrade turned the Balkan
country into the only European Union member with a
non-investment grade credit rating [].
The agency also cut its debt ratings and outlook for a
swathe of other emerging economies after a month in which
investors have cashed-in investments in the sector due to
worries over their ability to draw in capital and fund debt.
By 1426 GMT, the Romanian leu <EURRON=> weakened 0.5 percent
to the euro at 3.74 and the Czech crown <EURCZK=> fell 0.4
percent to 25.168 per euro after October inflation and jobless
data pointed to more interest rate cuts [].
"Romania is clearly less certain... (and) could be
vulnerable if global conditions started to deteriorate again,"
said Jon Harrison, currency strategist at Dresdner Kleinwort in
London.
Fitch also cut Hungary to BBB on Monday due to the likely
severity of a recession there and a post-crisis correction,
related risks to public finances and foreign currency mismatches
in the private sector [].
However, the forint <EURHUF=> shrugged off the news, rising
0.5 percent to bid at 265.16 per euro in thin trade.
"It's more serious for Romania rather than Hungary, which
has the benefit of a rescue package," said Harrison.
A $25 billion deal with the International Monetary Fund and
European Union helped calm some nerves around Hungary in the
last week, but investors remain worried the fallout of the
financial crisis has some way to run in central Europe.
Serbia's dinar <EURRSD=> dipped to 84.97 to the euro on
Monday. Serbia is another country that has gone to the IMF for
possible aid.
Increasingly grim economic outlooks are starting to weigh on
the region as well, pushing the Czechs last week to slash
interest rates by 75 basis points along with other global
central banks responding to mounting economic stress.
Poland's zloty <EURPLN=> also slipped 0.2 percent to 3.659
per euro ahead of a public holiday on Tuesday, but its bonds
gained ground.
In Hungary the central bank bought 50 billion forints
($245.7 million) in state bonds, based on a deal last month that
aimed to kick-start seized up debt markets [].
"The (bond) market remains illiquid. If you can see a deal,
the next price will be in a 30-basis-point distance; buyers and
sellers are fleeing from each other," a Budapest trader said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.168 25.077 -0.36% +5.02%
Polish zloty <EURPLN=> 3.659 3.653 -0.16% -1.62%
Hungarian forint <EURHUF=> 265.160 266.490 +0.50% -4.87%
Croatian kuna <EURHRK=> 7.144 7.139 -0.07% +2.49%
Romanian leu <EURRON=> 3.742 3.724 -0.48% -4.52%
Serbian dinar <EURRSD=> 84.970 84.847 -0.14% -7.88%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to 135bps over bmk*
5-yr T-bond CZ5YT=RR -10 basis points to +136bps over bmk*
10-yr T-bond CZ9YT=RR -10 basis points to +80bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -21 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR -29 basis points to +321bps over bmk*
10-yr T-bond PL10YT=RR -8 basis points to +255bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +993bps over bmk*
5-yr T-bond HU5YT=RR +19 basis points to +939bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +580bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1526 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Jason Hovet)
