* FX drift as focus turns to next week's rate decisions
* EU leaders to bolster funds to hard-hit countries
* Polish cbank head says "still in easing bias"
(Adds new comments, Budapest meeting, fresh prices.)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, March 20 (Reuters) - Emerging European
currencies reversed early losses against the euro on Friday to
move higher on the day helped by news that EU leaders agreed to
double the bloc's crisis funds for non-euro zone members.
Market players are also eyeing a round of central bank
meetings starting in the region next week.
European Union (EU) leaders in Brussels agreed to double the
bloc's crisis funds for rescuing non-euro zone members, as well
as to seek a doubling of International Monetary Fund (IMF)
resources to help countries hit in the downturn. []
Analysts said the EU moves, already well-flagged to the
market, could help boost confidence in the hard-hit central and
eastern European region where falling economic growth and
financing concerns have pushed currencies to multi-year lows.
The Polish zloty <EURPLN=> rose 0.9 percent from Thursday's
domestic close to 4.576 per euro by 1535 GMT. The Hungarian
forint <EURHUF=> was flat to bid at 301.50 per euro and the
Czech crown <EURCZK=> rose 0.9 percent to 26.65.
But the funds pledged by the EU fall short of the amount
which would solve the problems of the region which is heavily
reliant on foreign financing, Goldman Sachs said in a note.
"After the recent rebound in CE-3 currencies, our forecasts
suggest some modest scope for FX weakening in 3-6 months. But
the larger the multilateral assistance that is made available,
the less these currencies may need to adjust," it added.
Currencies have this week lost much of their strong gains of
this month which followed rallies on stock markets. Dealers said
markets had cooled after the U.S. Federal Reserve set plans this
week to buy up government debt, flooding markets with cash.
CENTRAL BANKS TO MEET
Investors also awaited a new round of interest rate meetings
in central Europe next week. Hungarian and Czech policymakers
are seen holding rates steady due to their weak currencies,
while Poland is expected to cut 25 basis points. []
Polish central bank governor Slawomir Skrzypek said on
Friday the bank was still in an easing bias. []
The region's central bankers ended a meeting in Budapest
without pointing to further measures after a coordinated verbal
intervention last month to prop up currencies. []
Since the coordinated effort, policy makers of states with
stronger fundamentals tried to talk investors into handling
weaker states like Hungary or Romania separately, but the
region's currencies have retained relatively tight correlation.
The Czech unit, however erased its losses since the end of
2008, while the leu <EURRON=> moved little in the past weeks and
also on Friday as markets watched Romania's talks with the IMF
on an aid package that was seen at around 20 billion euros.
Outside the bloc, Serbia's central bank held its key policy
rate steady on Friday as it awaits the outcome of talks with the
IMF on a new 3.0 billion euro loan. [] The dinar
currency <EURRSD=> was up a touch at 94.42 to the euro.
In Hungary, the government bond yield curve has almost
flattened out in the past week, and the state debt agency is
expected to continue buying back paper.
Some confusion came late on Thursday when Prime Minister
Donald Tusk said Poland to start talks with the IMF on credit
lines. But Finance Minister Jacek Rostowski later said Poland
needs no IMF help and instead may lend the body.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.65 26.89 +0.9% +0.39%
Polish zloty <EURPLN=> 4.576 4.616 +0.87% -10.07%
Hungarian forint <EURHUF=> 301.49 301.45 -0.01% -12.58%
Croatian kuna <EURHRK=> 7.438 7.441 +0.04% -0.98%
Romanian leu <EURRON=> 4.292 4.297 +0.12% -6.47%
Serbian dinar <EURRSD=> 94.49 94.64 +0.16% -5.3%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 218bps over bmk*
4-yr T-bond CZ4YT=RR +7 basis points to +282bps over bmk*
8-yr T-bond CZ8YT=RR +29 basis points to +329bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -18 basis points to +1041bps over bmk*
5-yr T-bond HU5YT=RR -56 basis points to +1022bps over bmk*
10-yr T-bond HU10YT=RR -43 basis points to +891bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1635 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/Sandor
Peto; Editing by Ron Askew)
