* Hungary cbank seen cutting key rate by 50 bps to 6.0 pct
* Zloty, forint gain, crown dips in thin trading, leu flat
* Bonds unchanged as market slows down for Christmas
(Adds bonds, updates market)
BUDAPEST, Dec 21 (Reuters) - Central European currencies
were mixed on Monday ahead of an interest rate decision in
Hungary where the central bank is expected to trim its main
lending rate further to aid an ailing economy.
The National Bank of Hungary (NBH) is expected to cut its
base rate on Monday by 50 basis points to a record low of 6.0
percent, according to a Reuters poll of analysts last week
<HUREPO1>.
That would be the fifth successive monthly cut of that size
by the bank which has reduced its base rate by a combined 300
basis points since July. []
The forint <EURHUF=> was 0.3 percent stronger versus the
euro in morning trade, unfazed by retail sales data
<HURETY=ECI>, which showed a 7.5 percent annual fall in October.
[]
Bond yields were little changed as markets anticipate few
factors to get investors off the couch.
"I think we all have come to terms with the possibility that
they will cut 25 or 50 (basis points)," a fixed income dealer
said in Budapest.
"If they keep rates unchanged, that would be news, but a 25
basis point cut won't be taken as a sign of an end to easing."
"The market now is in a total pre-Christmas mode," another
dealer added. "(There is) hardly any turnover."
Poland's zloty <EURPLN=> led modest gains, adding 0.5
percent versus the euro ahead of the last interest rate decision
of the year on Dec. 23, where the Polish central bank is
expected to leave interest rates on hold. []
"The first day of the new and shorter week should not bring
any significant changes of the zloty," wrote BPH in a morning
report. "We expect the EUR/PLN level at 4.18-4.21."
Analysts also do not expect any significant reaction to the
interest rate decision on Wednesday, with all economists polled
by Reuters predicting the borrowing costs unchanged.
The Czech crown <EURCZK=> bucked the early trend to shed 0.2
percent against the euro, but dealers said there were no
fundamental drivers and the only factor seemed to be adjustment
of positions in major currencies.
"The crown could weaken further, but only a bit," said David
Sykora, dealer at CSOB.
The Czech central bank surprised markets last week by
cutting interest rates to a new record low of 1 percent, showing
concern about protracted economic weakness despite signs of
slightly higher price pressures. []
The Romanian leu <EURRON=> edged up in early trade,
supported by pre-Christmas expectations of currency inflows from
Romanians working abroad. One in ten Romanians has left the
country in recent years in search of better living standards.
Markets were eyeing a confidence vote this week on a
centrist cabinet unveiled by Prime Minister designate Emil Boc
on Sunday [].
Parliament is expected to vote on the cabinet on Wednesday
with approval all but guaranteed since Boc's coalition has five
votes more than the 236-seat majority needed in both houses.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.321 26.277 -0.17% +1.64%
Polish zloty <EURPLN=> 4.185 4.207 +0.53% -1.67%
Hungarian forint <EURHUF=> 275.82 276.62 +0.29% -4.45%
Croatian kuna <EURHRK=> 7.283 7.285 +0.03% +1.13%
Romanian leu <EURRON=> 4.211 4.21 -0.02% -4.67%
Serbian dinar <EURRSD=> 96.15 96.06 -0.09% -6.94%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -34 basis points to +98bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +94bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +82bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +394bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +372bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +312bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +594bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +539bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +477bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1112 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
(Reporting by Reuters bureaux, Writing by Gergely Szakacs,
editing by Mike Peacock)
