BUDAPEST, Nov 3 (Reuters) - East Europe's currencies eased
on Tuesday with the forint leading losses after a sharp dip
overnight and dealers more weakening could be on the cards.
Stock markets were also in negative territory across the
region, with Budapest <> down 1.7 percent and Warsaw
<> down 1.5 percent at 0851 GMT.
The zloty <EURPLN=> and Czech crown <EURCZK=> also slipped
with regional peers.
Markets were looking ahead to a rate decision in Romania
where the central bank is expected to cut rates by 50 basis
points to 7.5 percent although some analysts said the bank may
hold fire amid uncertainty over the budget and IMF financing.
The forint <EURHUF=> briefly plunged to near 289 versus the
euro in overnight trading which dealers said was likely due to a
mishit, which then triggered stop losses.
The currency then recovered and opened around 278 but
dealers said it may ease towards 280, and the next support level
was at 282.50.
"It was a mishit, there was a deal at 278.5 and the next
price in the system was for 288.6 and it was struck," a currency
dealer said.
"Subsequently there were a few deals around 280/283 as a
raft of stops were knocked out, but then it came back below
280," he said.
"Sentiment is slightly worse now, the zloty is also weaker,"
another dealer said, adding that the forint could easily weaken
to around 280.
The leu <EURRON=> was stable with the market eyeing the
central bank.
"Their decision to further cut the rate is widely
anticipated ... but they seem determined to prevent any large
fall of the leu," said one dealer with a foreign bank in
Bucharest.
Analysts at Unicredit, on the other hand, said in a note
that they expected the bank to hold fire.
"We expect NBR to keep rates on hold: the NBR is holding its
rate decision meeting today and we expect rates to be kept
unchanged due to increased political noise (and potentially due
to IMF advice)," Unicredit said.
Romania's approval of a 2010 budget by Dec. 10 is essential
for Bucharest to receive quickly a third tranche of aid from the
International Monetary Fund, a representative of the Fund told
Reuters on Monday. []
Mihai Tanasescu, Romania's IMF representative in Washington,
said he saw a 50-50 chance of the fund disbursing the 1.5
billion tranche, while analysts said political jostling ahead of
a Nov. 22 election could scupper a quick budget deal.
Hungary's parliament will also hold a key vote on the main
numbers of the 2010 budget later on Tuesday, which is widely
expected to pass [].
In the Czech Republic, the central bank will hold a rate
decision on Thursday and analysts expect rates to stay on hold,
although some in the markets are pricing in a cut.
But dealers said the crown will mostly take its cue for now
from regional and global factors on Tuesday.
"We think that the crown is going to weaken, but the timing
is unclear. It could test the 27.0 level (against euro)," a
Prague dealer said.
-------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.405 26.343 -0.23% +1.32%
Polish zloty <EURPLN=> 4.294 4.267 -0.63% -4.17%
Hungarian forint <EURHUF=> 278.69 276.67 -0.72% -5.43%
Croatian kuna <EURHRK=> 7.238 7.242 +0.06% +1.75%
Romanian leu <EURRON=> 4.306 4.3 -0.14% -6.77%
Serbian dinar <EURRSD=> 93.73 93.59 -0.15% -4.53%
All data taken from Reuters at 0949 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
(Reporting by Krisztina Than, editing by Mike Peacock)
