(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Dec 4 (Reuters) - The zloty shed around 1 percent
against the euro on Thursday, with dealers saying speculation on
companies' FX contracts might have cooled some investors'
appetite for the Polish currency.
The zloty led losses in central Europe as other central
European currencies were a shade weaker ahead of a euro zone
rate decision due at 1245 GMT.
At 1053 GMT the zloty <EURPLN=> was 0.9 percent down from
Wednesday's levels to the euro, bidding at 3.872 after weakening
to the key 3.90 level. The Polish currency has lost 7.2 percent
since the beginning of the year.
Last Friday the economy minister said Polish companies may
face serious financial problems as they shell out millions of
zlotys to settle foreign exchange contracts with the weakened
currency [].
"It seems foreign investors found media information on
Polish companies' FX contracts very unsupportive for the zloty,"
said Jan Koprowski, dealer at BNP Paribas in Warsaw.
He said investors may be speculating on news that some
companies are now being forced to book losses on FX contracts
after the zloty has lost some 18 percent since July peaks.
On Wednesday the financial watchdog KNF announced the
institution aims to investigate the issue. "We expect that
around December 15 we will analyse data on the scale of the
issue," KNF spokesman Lukasz Dajnowicz told Reuters.
Central Europe's currencies have all fallen sharply from
record highs hit in the summer, and most central banks have
started easing monetary policy in the face of the global
slowdown that is hitting the region's export-driven economies.
Serbia's dinar has been the worst hit since the summer and
the dinar <EURRSD=> now trades around record lows. On Thursday,
the central bank's governor announced the bank would raise the
dinar reserve requirement for commercial banks to stem the fall
of its national currency.[]
The dinar was steady at 91.33 per euro.
ECB IN FOCUS
Elsewhere in the region currencies held steady ahead of the
European Central Bank's decision on rates with expectations on a
50 basis points cut, but trading was subdued. []
"I expect some exporters (to be interested) at this level,
but right now (the crown) is holding steady," said a dealer at
Prague-based bank.
The dealer said a larger than expected ECB cut -- which
would move ECB rates below Czech ones for the first time since
February 2005 -- could give short-term support to the crown.
Elsewhere, stocks rallied more than 2 percent on Thursday,
stemming losses for currencies, with the Czech crown <EURCZK=> a
touch down at 25.697 to the euro, while the Hungary's forint
<EURHUF=> was almost unchanged against the euro.
Romania's leu <EURRON=> dipped 0.2 percent to 3.842 per euro
as talks continued on a new government after a weekend election.
In bonds, Hungarian yields dropped sharply on Thursday
morning by about 30 bps on strengthening rate cut expectations.
"Regardless of the ECB decision, yield levels are pricing in
further central bank rate cuts, and the market takes for granted
a further at least 50 basis point cut," one dealer said
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.697 25.68 -0.07% +3.02%
Polish zloty <EURPLN=> 3.872 3.838 -0.89% -7.54%
Hungarian forint <EURHUF=> 260.53 260.42 -0.04% -3.04%
Croatian kuna <EURHRK=> 7.189 7.184 -0.07% +1.88%
Romanian leu <EURRON=> 3.842 3.833 -0.23% -7.31%
Serbian dinar <EURRSD=> 91.333 91.522 +0.21% -15.96%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +7 basis points to 207bps over bmk*
5-yr T-bond CZ5YT=RR -32 basis points to +161bps over bmk*
10-yr T-bond CZ9YT=RR -21 basis points to +148bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +11 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +338bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +294bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -36 basis points to +838bps over bmk*
5-yr T-bond HU5YT=RR -46 basis points to +778bps over bmk*
10-yr T-bond HU10YT=RR +14 basis points to +634bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1053 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; Editing by Ruth Pitchford)
