(Recasts, with new dateline, prices and comments)
By Sandor Peto and Dagmara Leszkowicz
WARSAW/BUDAPEST, Nov 25 (Reuters) - Emerging European
currencies extended gains on Tuesday, lifted by new U.S. plans
to stimulate the economy, rising equity markets and a weakening
of the dollar<EUR=> during late trade in Europe.
The firming was led by Poland's zloty despite a move by some
investors in the country to price in an interest rate cut at the
central bank's meeting on Wednesday.
Hungary's central bank cut its own rates earlier this week,
triggering some expectations that Poland could be the next to
ease monetary screws, but the forint firmed as the timing of the
Hungarian cut was good, dealers said.[]
A rate cut would cut into the premium investors get for
holding assets in the zloty, but might also bolster the
economy's chances of riding out a slowdown in the euro zone and
tightening access to credit domestically.
At 1459 GMT the zloty<EURPLN=> was up 1.2 percent to the
euro at 3.795, the forint<EURHUF=> firmed 0.48 percent to
259.60, while the Czech crown strengthened by 0.89 percent to
25.135.
In Poland the short end of the government bond curve
declined as a rate cut was priced in and politicians and bankers
lobbied for a rate reduction, although analysts have stuck to
forecasts that the central bank would hold fire. []
"The latest data shows a rate cut is possible and some
market players are bidding on that. This is reflected on the
short-end of the curve," said Pawel Golebiewski a bond dealer at
the BPH bank.
Hungary's central bank surprised on Monday by cutting its
base rate by 50 basis points to 11.0 percent, offering some hope
for the economy after an emergency rate hike of 300 basis points
and IMF deal that are expected to preface a recession.
"With the cut the central bank signalled that it is ready to
ease, that trends can be positive, and its cut in (commercial
banks') mandatory reserves (to 2 percent from 5 percent) was
also a very clever move," one Budapest-based dealer said.
"The dollar weakening (also) helped," the dealer said,
adding that the forint could stay around 260 in the short term.
Central European bourses posted gains, with Warsaw's
WIG<> firming 1.25 percent by 1515 GMT, Prague's PX <>
rising 3.16 percent and Budapest's BUX<> gaining 2.7
percent.
Stocks in developed economies also firmed as the U.S. and
Europe prepared new measures to tackle the economic downturn,
while the dollar fell against the euro after a report showed
that the U.S. economy contracted in the third quarter.
In other trade, the Romanian leu <EURRON=> eased 0.16
percent versus the euro to 3.79, bucking the regional trend as
importers bought the euro in the domestic demand-driven economy,
though leu buying by companies who need to pay taxes on Tuesday
partly offset the euro demand.
"There are greater energy imports for the cold season and
seasonal hard currency demand ahead of Christmas," said one
dealer of a foreign bank in Bucharest.
Meanwhile, Serbia's central bank intervened again in the
market, selling 40 million euros to stem falls by the
dinar<EURRRSD=> and lifted the currency to 88.19 against the
euro from a low at 89.90.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.135 25.36 +0.89% +5.14%
Polish zloty <EURPLN=> 3.795 3.841 +1.2% -5.4%
Hungarian forint <EURHUF=> 259.6 260.84 +0.48% -2.67%
Croatian kuna <EURHRK=> 7.131 7.117 -0.2% +2.67%
Romanian leu <EURRON=> 3.798 3.792 -0.16% -6.08%
Serbian dinar <EURRSD=> 88.19 88.847 +0.74% -11.97%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -2 basis points to 165bps over bmk*
5-yr T-bond CZ5YT=RR -5 basis points to +141bps over bmk*
10-yr T-bond CZ9YT=RR +18 basis points to +103bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR -11 basis points to +334bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +272bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -45 basis points to +993bps over bmk*
5-yr T-bond HU5YT=RR -52 basis points to +914bps over bmk*
10-yr T-bond HU10YT=RR +14 basis points to +630bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1556 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz/Sandor Peto; Editing by Ruth Pitchford)
