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By Sandor Peto and Marius Zaharia
BUDAPEST/BUCHAREST, Nov 17 (Reuters) - Central European
currencies fell on Monday, led by the Romanian leu, as the
weekend's G20 summit made investors shy away from risk.
Markets shuddered under the wave of news about declining
economies, with Japan the latest country to enter a recession.
European equity markets fell. In the region, the Polish
bourse's WIG20 <> share index had shed 3 percent at 1240
GMT, Budapest's BUX <> fell 0.5 percent and Bucharest's BET
<> was down 3 percent.
The G20 meeting of leaders of major industrialised countries
did not decide on any fresh money for the IMF, although the Fund
said it was likely to need an extra $100 billion in the next six
months to help countries which are in trouble.
(For details please double click on [])
The leaders agreed on steps to rescue the global economy
[], but generally left it to individual governments
to tailor their own response [].
The Romanian leu <EURRON=> was worst hit in the region,
falling 2.4 percent to 3.773 per euro.
"The G20 meeting didn't produce any fast solution to tackle
the crisis and the region is affected," said one dealer with a
foreign bank in Bucharest. "The leu is falling more because
commercial demand for euros from retailers adds up."
Ratings agency Standard & Poor's cut Hungary's ratings to
'BBB/A-3' from 'BBB+/A-2' with a negative outlook, due to its
dependence on external financing inflows in a deteriorating
global environment [].
The market impact is expected to be neutral. "In theory, it
should not have a serious market impact. Everybody had expected
that after the downgrades by Fitch and Moody's," said Orsolya
Nyeste, analyst at Erste Bank in Budapest. The forint <EURHUF=>
traded 0.8 percent lower at 268.54 per euro.
The Polish zloty <EURPLN=> lost 1.8 percent to 3.773 per
euro, while the Czech crown <EURCZK=> dropped 0.2 percent to
25.377 to the euro.
Serbia's dinar <EURRSD=>, one of the most battered
currencies in the region, lost more than one percent on the day
as well and was bid at 86 against the euro.
The dinar, which has shed some nine percent this year
despite repeated interventions by the central bank, weakened
further despite news on Friday that the IMF had extended a $516
million lifeline to Serbia.
The dinar was pushed lower mainly by domestic orders. "The
market is unimpressed by the (size of the) IMF deal," one
Belgrade-based dealer said.
Ukraine and Hungary secured IMF help last month to ease
investor concerns over foreign currency exposure.
Elsewhere, Croatia's kuna traded flat at 7.115 to the euro.
"The system liquidity is tightened, and we see the kuna
trading at between 7.10 and 7.16 to the euro this week, amid a
solid offer of euros and banks' strong demand for the local
currency for mandatory reserves maintenance," Hypo
Alpe-Adria-Bank said in its daily note.
"In such a situation, we also see the benchmark overnight
lending rate around the current high levels (at between 15 and
20 percent) this week."
Polish and Hungarian government bonds moved sideways and in
Hungary market liquidity remained very tight.
"The (Polish) market awaits the Monetary Policy Council
meeting due late November and if the MPC decides to cut rates
unexpectedly it might animate the market," said Maciej Slomka,
chief dealer at Pekao bank in Warsaw.
Czech domestic markets were closed due to a public holiday.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.377 25.325 -0.21% +4.23%
Polish zloty <EURPLN=> 3.773 3.707 -1.78% -4.79%
Hungarian forint <EURHUF=> 268.54 266.44 -0.8% -6.02%
Croatian kuna <EURHRK=> 7.115 7.115 0% +2.89%
Romanian leu <EURRON=> 3.793 3.705 -2.38% -5.94%
Serbian dinar <EURRSD=> 86 85.007 -1.17% -9.19%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +14 basis points to 157bps over bmk*
5-yr T-bond CZ5YT=RR -5 basis points to +138bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +82bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +418bps over bmk*
5-yr T-bond PL5YT=RR -17 basis points to +345bps over bmk*
10-yr T-bond PL10YT=RR -13 basis points to +269bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -48 basis points to +1020bps over bmk*
5-yr T-bond HU5YT=RR -58 basis points to +966bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +576bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1016 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus, writing by Sandor Peto and
Marius Zaharia; Editing by David Stamp)
