BUDAPEST, Oct 26 (Reuters) - Central European currencies
opened a tad weaker on Monday, with markets eyeing developments
on a proposed new government in Romania, but dealers said dollar
weakness would support regional currencies in the short run.
Romania's Prime Minister designate Lucian Croitoru unveiled
a cabinet line-up on Friday and parliament meets on Monday to
decide a schedule for hearings of the proposed government
members, and dealers said investors were eyeing the process.
[]
"If the proposed government doesn't pass, investors have
sort of priced it in already. But if by miracle we have a
government, then the leu should rally to 4.2," said a dealer in
Bucharest.
"If the leu couldn't be weakened, all it needs is some
positive news and it should firm."
On Sunday, President Traian Basescu said the Romanian leu's
current level is "optimal" and Romania must ensure it continues
to receive international aid to avoid currency weakness that
would badly hurt households [].
One dealer said the comments shouldn't have an impact on the
unit, as it is a "de facto peg".
Romania's leu <EURRON=> has been the most stable floating
currency in the eastern European Union since March, moving in a
tight range of 4.2-4.3 per euro. At 0808 GMT, it traded up 0.02
percent at 4.287 to the euro.
The Polish zloty <EURPLN=> eased slightly, in line with most
other regional currencies, but analysts said no major moves were
expected early in the week and investors will be eyeing the
central bank's interest rate decision due on Wednesday.
"The start of the week should be relatively quiet on the
currency market. The value of the zloty will continue to be
driven by the global sentiment and EUR/USD," Bank BPH wrote in a
morning note to clients.
All analysts polled expect policymakers to keep interest
rates on hold but many expect the statement to change its tone
to a more neutral one from current easing.
The bank's inflation projection will be released this month
as well, which should present a good opportunity for the central
bank's Monetary Policy Council to move away from its informal
easing bias, some economists say.
The Polish central bank's key rate stands at its all-time
low of 3.5 percent.
The Czech crown <EURCZK=> eased a touch with other central
European currencies, although dealers said dollar weakness could
lend support.
"We are watching mainly the euro/dollar right now," a dealer
said. "If I had to bet, I could see some firming later."
The dealer added trade was expected to be quiet with a state
holiday on Wednesday cutting up the week.
Hungary's forint <EURHUF=> opened the week 0.3 percent
weaker after a three-day weekend, but dealers said the 267 level
to the euro would likely contain further easing.
"The morning is terribly quiet, we opened a shade weaker
than the domestic close on Thursday," a currency dealer said. "I
would not expect persistent weakness in the forint, and the 267
level seems a strong trigger to sell euros."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.895 25.876 -0.07% +3.31%
Polish zloty <EURPLN=> 4.181 4.176 -0.12% -1.58%
Hungarian forint <EURHUF=> 266.65 265.95 -0.26% -1.16%
Croatian kuna <EURHRK=> 7.215 7.215 0% +2.08%
Romanian leu <EURRON=> 4.287 4.288 +0.02% -6.36%
Serbian dinar <EURRSD=> 93.06 93.11 +0.05% -3.85%
All data taken from Reuters at 0908 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz
and Marius Zaharia; editing by Patrick Graham/Victoria Main/Andy
Bruce)
