(Changes dateline, new throughout)
BUDAPEST, Sept 23 (Reuters) - Most Central European
currencies and government bonds eased on Tuesday as continued
global concerns over the liquidity of markets weighed on
sentiment.
The fall was led by the Czech crown <EURCZK=> which headed
beyond the key 24 per euro level where it held most of the
afternoon as investors look ahead to the central bank meeting on
interest rates on Thursday.
"We saw interest to buy the euro against the Czech crown
since early morning," said a Prague trader, adding the crown
opened strong but was knocked back by a large order in the
morning. "Since that time it was one-way business only."
The central bank, which cut rates last month, is seen
keeping them on hold at its upcoming meeting at 3.5 percent.
While the crown shed 0.87 percent against the euro by 1500
GMT, the losses of the Polish zloty <EURPLN=> were more moderate
at 0.15 percent.
Poland's central bank will end a two-day meeting on
Wednesday and is seen keeping its base rate unchanged at 6.00
percent, maintaining support for the currency and government
bonds.
Expectations for rate hikes in the next months further eased
after Polish figures showed weak 7.7 percent annual growth in
retail sales in August, against analysts' 12.4 percent forecast
in a poll.
"Investors are now awaiting tomorrow's rate decision,
although the decision is pretty much predetermined. The central
bank will likely keep rates ucnhanged," said Marcin Ziolkowski,
fixed-income dealer at Millennium Bank.
Hungary's central bank, when it meets on Sept 29, is also
expected to keep its base rate on hold at even higher levels, at
8.5 percent.
The Hungarian forint <EURHUF=> bucked the regional trend and
was steady against the euro.
"The forint's volatility has subsided, (although) of course
everybody is cautious, watching negative news (from the U.S. and
global markets)," one Budapest-based currency trader said.
Fixed income traders said global liquidity concerns kept
demand for government bonds low even though two-year forint
interest rate swaps at around 8.15 percent were lower than
corresponding bond yields by a full percentage point.
"The swaps price in interest rate cuts, but people do not
have cash to buy bonds," one Budapest-based trader said.
Romania's leu weakened <EURRON=>, in a market driven mostly
by commercial orders from local banks and thin foreign trade,
tracking other currencies in the region.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.058 23.851 -0.87% +9.2%
Polish zloty <EURPLN=> 3.300 3.295 -0.15% +8.35%
Hungarian forint <EURHUF=> 240.430 240.480 +0.02% +4.91%
Croatian kuna <EURHRK=> 7.120 7.111 -0.13% +2.82%
Romanian leu <EURRON=> 3.661 3.622 -1.08% -2.26%
Serbian dinar <EURRSD=> 76.238 76.178 -0.08% +3.20%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +10 basis points to 9bps over bmk*
5-yr T-bond CZ5YT=RR +16 basis points to 0bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +31bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +14 basis points to +237bps over bmk*
5-yr T-bond PL5YT=RR +9 basis points to +189bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +155bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +18 basis points to +517bps over bmk*
5-yr T-bond HU5YT=RR +15 basis points to +477bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +355bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1722 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters buros, writing by Sandor Peto; editing
by Stephen Nisbet)
