(Adds ECB rate cut, dinar rise, quotes)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, Dec 4 (Reuters) - Central European
currencies were resilient to an ECB rate cut on Thursday, while
the battered dinar received special treatment from Serbia's
central bank and Poland's zloty was damaged by Polish corporate
worries.
The European Central Bank cut interest rates by 75 basis
points to 2.50 percent, its biggest ever move as euro zone's
economy struggles with a recession that is also impacting
central Europe's export economies [].
"In theory, investors should feel some relief because such a
cut stimulates the euro zone economy and implicitly CEE exports
to the euro zone," said one dealer. "But the (global crisis)
effects on real economies have not reached the bottom yet, so
the enthusiasm is restrained."
The Hungarian forint <EURHUF=> and the Czech crown <EURCZK=>
traded flat, even though the ECB move brought the euro zone rate
below the Czech one for the first time since February 2005.
The Serbian dinar <EURRSD=> was an outperformer, trading 1.6
percent higher at 90.11 per euro, after the central bank
announced plans to raise dinar reserve requirements for
commercial banks. [].
The bank has spent more than 700 million euros since October
in intervening on currency markets to try to halt a dinar fall
propelled by worries over external financing.
HEDGING WOES IN POLAND
Poland's zloty <EURPLN=> took a beating on Thursday, as
investors were concerned Polish companies were overexposed to
hard-currency hedging. At 1353 GMT, it was 0.3 percent off at
3.869 per euro, recovering from intra-day lows of beyond 3.9.
Polish officials and some companies have said the Polish
corporate sector may stand to lose billions of euros as their
hedging contracts went the wrong way following the surprise fall
in the value of the zloty in October, which is down 12.7 percent
since Oct. 1.
The zloty had been appreciating rapidly up to the summer,
prompting exporters to hedge against further zloty rise through
option contracts which are now being called by the banks.
With the scale of the companies' total exposure hard to
estimate, alarmist reports in some media spooked investors.
"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, adding
investors may be speculating on this.
On Wednesday, the financial watchdog (KNF) said it would
investigate the scale of the issue by mid-December.
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 slashing the region's growth rates.
In Romania, the leu <EURRON=> dipped 0.2 percent to 3.842
per euro as talks continued on a new government after a weekend
parliamentary election.
In bond markets, Hungarian bond yields dropped further on
Thursday, extending big gains in the morning, but traders said
the bigger-than-expected ECB rate cut had no tangible impact.
"Yields kept coming down the whole day, but there was
nothing special after the ECB, it is more domestic interest rate
expectations driving the market," a fixed income trader said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.71 25.69 -0.08% +2.97%
Polish zloty <EURPLN=> 3.869 3.857 -0.31% -7.46%
Hungarian forint <EURHUF=> 261.06 261.1 +0.02% -3.25%
Croatian kuna <EURHRK=> 7.181 7.184 +0.04% +1.99%
Romanian leu <EURRON=> 3.84 3.831 -0.23% -7.26%
Serbian dinar <EURRSD=> 90.11 91.552 +1.58% -14.41%
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
and Marius Zaharia; Editing by Andy Bruce)
