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WARSAW, Oct 8 (Reuters) - The Polish zloty fell to its
lowest level since April and was tracked by the Hungarian forint
on Wednesday to lead a retreat in central Europe as the
financial crisis continued to unnerve investors.
The Region's currencies have swung widely this week as
questions rise over western banks' stability and concerns grow
that the global economy is in for a deep slowdown, hitting
export-dependent central European states.
"The worse sentiment is on the (global) market, the more it
impacts emerging markets," said Rafal Benecki, senior economist
at ING Bank. He said the zloty's <EURPLN=> fall was largely
caused by lack of liquidity.
Poland's deputy finance minister said earlier in the day the
government will soon present its euro 2012 adoption roadmap.
By 1045 GMT, the zloty was down 1.58 percent to the euro at
3.468, while Hungary's forint <EURHUF=> was close behind, down
1.39 percent at 252.4 per euro.
The Czech crown <EURCZK=> was down 0.26 percent to 24.643
against the euro. September inflation data -- although showing a
higher than expected figure -- did not change market's view on
further interest rates cuts.
"The economic outlook is now more important than inflation,
so the central bank will probably cut interest rates in
November," said Pavel Sobisek, chief economist at UniCredit in
Prague.
The Romanian leu <EURRON=> traded off 0.05 percent lower at
3.912 to the euro as the currency searched for direction.
Serbia's dinar, following three days of intervention by the
central bank to stop a slide of more than 4 percent against the
euro, was off 0.3 percent at 80.36 per euro.
Stocks were also hit overnight after a speech from the
Federal Reserve's head, Ben Bernanke, who suggested a gloomier
economic outlook and a rate cut at the upcoming FED meeting.
Asian and European stocks sold off, with eastern European
bourses all touching multi-year lows [] and Romanian
authorities halting trading on the bourse there after heavy
losses [].
RATE CUTS?
Economies in central Europe have come under strain in recent
months due to weakening demand from the euro zone, with growth
outlooks dimming further in recent weeks, helping shift
expectations towards interest rate cuts.
The shift has been most dramatic in Poland, where just a
month ago analysts had expected tighter monetary policy to
combat inflation as the government prepares for euro adoption by
2012. Analysts said that has changed.
"Yesterday's comment by the Polish central bank's head
prompted us to believe that the Monetary Policy Council is
unlikely to raise interest rates at the October meeting,"
analysts at BPH bank in Warsaw wrote in a morning note.
On Monday Poland's central bank's governor Slawomir Skrzypek
said the ongoing global financial crisis will have an impact on
Poland's monetary policy. He gave no further details but markets
read his statement as supporting doves on the bank's council.
Hungarian and Polish bonds were little moved on Wednesday.
Dealers said the market overall is grasping for any new trend to
follow. Poland's 10-year bonds tender appeared successful and
supported the long-end of the curve, analysts said.
"Taking into account current situation, demand (at the
tender) was strong and the price was reasonable," said an
analyst at Warsaw-based bank.
On Wednesday Poland sold 2.5 billion zlotys in DS1019 bonds
at a primary tender on bids worth 4.47 billion zlotys.
========================Market Snapshot========================
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.653 24.589 -0.26% +6.96%
Polish zloty <EURPLN=> 3.468 3.414 -1.58% +3.68%
Hungarian forint <EURHUF=> 252.4 248.93 -1.39% +0.18%
Croatian kuna <EURHRK=> 7.134 7.131 -0.04% +2.63%
Romanian leu <EURRON=> 3.912 3.91 -0.05% -9.27%
Serbian dinar <EURRSD=> 80.36 80.12 -0.3% -2.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +30 basis points to 61bps over bmk*
5-yr T-bond CZ5YT=RR +21 basis points to +42bps over bmk*
10-yr T-bond CZ9YT=RR +28 basis points to +44bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +18 basis points to +312bps over bmk*
5-yr T-bond PL5YT=RR +12 basis points to +265bps over bmk*
10-yr T-bond PL10YT=RR +6 basis points to +218bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +13 basis points to +691bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +649bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +495bps over bmk*
*Benchmark is German bond equivalent.
Currency data taken at 1245 CET, bond data taken from Reuters at
1035 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaus; Writing by Dagmara
Leszkowicz; Editing by Victoria Main)
(Writing by Dagmara Leszkowicz)
