BUDAPEST, Oct 19 (Reuters) - Eastern Europe's currencies
were mixed on Tuesday morning after Hungary's economic plan
failed to dispel investors' concerns while a call for a
no-confidence vote in Romania added to local uncertainties.
Hungary gave a few more details on Monday of its plans to
pay for income tax cuts aimed at boosting domestic demand by
imposing large taxes on banks, energy firms and the telecoms and
retail sectors. []
Analysts said the scheme would ensure that Hungary meets its
near-term deficit-cutting targets but had doubts about the
longer term. They fear some of the measures could hurt economic
growth and the unorthodox approach could discourage investors.
"People in the market have two basic thoughts: on the one
hand they think the government will meet the deficit targets and
that's positive -- but the way they do it, the structure, is not
appropriate as it could hurt growth and raise inflation," an FX
dealer in Budapest said.
"So I think feelings are mixed right now."
The forint <EURHUF=> which fell to its lowest level in
October past 277 to the euro on Monday, traded at 275.84 at 0745
GMT, up 0.1 percent from Monday's closing level.
"The earlier appreciation path of the forint has been
decidedly broken, and the future path is uncertain as
budget targets seem secure but the long-term sustainability of
the budget's composition is highly questionable," CIB Bank said.
The Romanian leu <EURRON=> traded 0.2 percent weaker against
the euro in early session on Tuesday following news the leftist
opposition filed a no-confidence motion against the coalition
government -- with a vote scheduled for next Wednesday.
"This brings a lot of uncertainty on the market," said one
dealer in Bucharest.
Analysts widely expect the government to survive the vote.
However, less than a year after taking power and unlocking
funds from an IMF bailout, Romania's fragile government faces a
deep crisis of confidence which could prevent it from delivering
the reforms needed to keep the money flowing. []
The zloty <EURPLN=> and the Czech crown <EURCZK=> were both
steady in early trade.
Investors in Poland await September's industrial output and
producer price data due at 1200 GMT. Output is seen solid, with
PPI up again. For a preview, please click []
Czech central banker Pavel Rezabek said on Monday the crown
rally was not a good thing for the economy, but reiterated
stable interest rates were needed. []
"Our opinion is similar: the crown is very strong. If it
were around 25, an interest rate hike in the autumn would be
simpler. (A hike now) will not be before the first quarter
2011," Ceska Sporitelna analysts said.
The crown is trading near 23-month highs hit in the past
month. The three-month average was 24.965, a touch stronger than
the central bank's forecast of 25.3 for the third quarter.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.495 24.491 -0.02% +7.44%
Polish zloty <EURPLN=> 3.927 3.926 -0.03% +4.51%
Hungarian forint <EURHUF=> 275.84 276.15 +0.11% -1.99%
Croatian kuna <EURHRK=> 7.332 7.332 0% -0.31%
Romanian leu <EURRON=> 4.291 4.284 -0.16% -1.25%
Serbian dinar <EURRSD=> 105.73 105.91 +0.17% -9.32%
All data taken from Reuters at 0944 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Krisztina Than;
Editing by Ruth Pitchford)
