WARSAW, May 6 (Reuters) - Central European currencies edged
lower behind the Polish zloty on Wednesday after a rally ran up
against a wall and investors cut back from riskier emerging
assets.
But Romania's leu held steady before an expected quarter
percentage point rate cut late in the day, while the crown found
some relief in the unwinding of cross trade versus the zloty.
The Polish unit <EURPLN=> slipped 0.6 percent on the day to
bid at 4.393 against the euro by 0845 GMT, while the crown
<EURCZK=> edged 0.3 percent lower to 26.687 per euro.
Stocks in central Europe bucked the trend, turning positive
as dealers said investors repositioned in equities after being
underweight in recent months.
Bourses also shook off news from a source late on Tuesday
that Bank of America needs as much as $34 billion in new
capital. []
"There are concerns about these U.S. stress tests (on banks)
which did create a weaker backdrop for emerging Europe today,"
said UniCredit emerging strategist Martin Blum.
"The bottom line is a lot of these eastern European
currencies had rallied quite significantly in the previous few
weeks, and I think at these levels... it will prove increasingly
difficult to drive eastern European currencies stronger."
The zloty and Hungarian forint have led gains with almost 4
percent rises since April 27. Romania's leu <EURRON=> has gained
1.3 percent in that time, hitting a 3-week high on Tuesday.
The forint <EURHUF=> edged 0.2 percent lower on Wednesday,
and the leu was steady at 4.157 per euro. Analysts expect
Romania's central bank to cut rates by 25 basis points to 9.75
percent due to a shrinking economy.
The country, one of three European Union members that have
sought external aid in the global financial crisis, is expected
to get the first tranche from its stand-by loan from the
International Monetary Fund on Wednesday. []
Darker economic outlooks in central Europe, widening fiscal
gaps and easier monetary policies are set to keep pressure on
currencies in coming months, although strategists don't expect
the wide swings seen earlier this year that sent units crashing.
The Czech central bank is expected to cut interest rates a
quarter point on Thursday. The crown has underperformed the
recent rally due to zloty cross plays, dealers said.
"There are still crosses being played... and it looks like
zloty/crown is the main entertainment," one Prague-based dealer
said. "Some people were long zloty/crown, and with some bounce
in the dollar people will be selling zloty and buying crown."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.687 26.62 -0.25% +0.25%
Polish zloty <EURPLN=> 4.393 4.369 -0.55% -6.33%
Hungarian forint <EURHUF=> 284.2 283.75 -0.16% -7.27%
Croatian kuna <EURHRK=> 7.369 7.405 +0.49% -0.05%
Romanian leu <EURRON=> 4.157 4.158 +0.02% -3.43%
Serbian dinar <EURRSD=> 94.623 94.72 +0.1% -5.44%
All data taken from Reuters at 1049 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; Editing by Ruth Pitchford)
