(Recasts with afternoon market recovery.)
By Sandor Peto
BUDAPEST, Oct 31 (Reuters) - Central European currencies
rose in afternoon trade on Friday, helped by gains by U.S.
shares and returning risk appetite.
While Thursday's Czech and Polish comments about possible
delays to their euro zone entry had been negative, dealers said
the recovery from recent deep losses was to be expected given
the global market environment.
"This week has been altogether more pleasant (than the
previous weeks), but you can't predict what will happen next
week," one Budapest-based dealer said, referring to jitters
caused by the global financial crisis in the past weeks.
The Czech crown<EURCZK=> firmed by 1.36 percent to the euro
by 1531 GMT to 24.118, the Polish zloty <EURPLN=> gained 1.39
percent to 3.556, while Hungary's forint <EURHUF=> strengthened
by 1.36 percent to 258.15.
Romania's leu <EURRON=> bucked the trend, easing by 0.63
percent to 3.661, but it joined the regional rebound in
afternoon trade.
"It fell in line with the region (in early trade), but a bit
faster because of central bank's decision (on Thursday) to cut
minimum reserve requirements for lei liabilities which should
depress money market rates," one trader said.
A Moody's analyst said the rating agency would not downgrade
Romania's debt to junk states, as Standard & Poor's did earlier
this week, unless its fiscal policy deteriorated "severely", but
there was little market reaction to the comments [].
Next week's key event will be the European Central Bank's
Nov. 6 meeting, at which it is expected to cut its main rate by
half a percentage point to 3.25 percent, analysts said.
"We expect other CEE (Central European) banks to follow with
cuts of their own, sooner or later," Erste Bank said in its
weekly report on the region. "The Czech National Bank is likely
to cut on the same day."[].
Hungarian government bonds gave up part of the week's gains
on Friday and traders said the market remained opaque and
volatile, though in narrower ranges than earlier this month.
Danske Bank said in its weekly report that the International
Monetary Fund package to Hungary was unlikely to end investors'
concerns over the region's external exposure and currency
swings, given continued deleveraging in the global economy.
"There will be no free lunches here," Danske said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.118 24.45 +1.36% +8.98%
Polish zloty <EURPLN=> 3.556 3.606 +1.39% +1.24%
Hungarian forint <EURHUF=> 258.15 261.72 +1.36% -2.1%
Croatian kuna <EURHRK=> 7.17 7.164 -0.08% +2.14%
Romanian leu <EURRON=> 3.661 3.638 -0.63% -2.26%
Serbian dinar <EURRSD=> 84.557 84.857 +0.35% -7.36%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +23 basis points to 201bps over bmk*
5-yr T-bond CZ5YT=RR -16 basis points to +162bps over bmk*
10-yr T-bond CZ9YT=RR -12 basis points to +112bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 1 basis points to +449bps over bmk*
5-yr T-bond PL5YT=RR -14 basis points to +364bps over bmk*
10-yr T-bond PL10YT=RR -14 basis points to +273bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +38 basis points to +1022bps over bmk*
5-yr T-bond HU5YT=RR +42 basis points to +957bps over bmk*
10-yr T-bond HU10YT=RR -15 basis points to +602bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1631 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus; Writing by Sandor Peto; Editing
by Andy Bruce)
