(Adds fixed income, details)
PRAGUE, Dec 23 (Reuters) - Central Europe's currencies held
mostly steady on Tuesday in thin year-end trade, with the zloty
ticking up before a Polish central bank meeting expected to
deliver a half point interest rate cut.
Most central banks in the region have started policy easing
as their economies suffer from the global economic slide, and
Poland's expected move will follow Hungary's 50 basis point trim
on Monday.
Hungary has now cut by half an emergency 300 bps hike in
October that helped relieve pressure on the battered forint
currency, and the central bank signalled more moves lower if the
financial system continued to stabilise. []
On Tuesday, the zloty <EURPLN=> added 0.3 percent to 4.102
per euro by 0936 GMT, and the forint <EURHUF=> slipped to 263.8
per euro, but dealers expected little impact from Poland's rate
decision due later as investors wind up year-end trade.
"The expected rate cut should not affect the zloty. But a
deeper cut may weaken it as it may prompt the market (that)
rates will be cut more sharply further," analysts at BPH bank in
Warsaw wrote in a morning note. []
The Polish bond market was quiet on Tuesday, and in forex
investors re-positioned before the end of the year, bringing
some stability to currencies that have suffered double digit
percent falls from summer highs.
The reversal has been especially painful for the zloty,
which has shed more than 25 percent since a July record high
with concerns over losses for companies that hedged the wrong
way weighing on already nervous sentiment in emerging markets.
In other trade, the Czech crown <EURCZK=> was off a touch at
26.28 versus the euro, and Serbia's dinar <EURRSD=> was stable
one day after its central bank held interest rates steady.
Romania's leu <EURRON=> inched lower to 3.924, with Bucharest
dealers expecting some firming going into the holidays.
"It may enter a firming path like yesterday as more
individuals and exchange houses, seeking to sell euros ahead of
the Christmas break, are expected," said one dealer with a
foreign bank in Bucharest.
Late on Monday, Romania's new centre-left coalition was
sworn in, raising hopes of swift policy decisions to ward off
the threat of financial crisis. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.285 26.28 -0.02% +0.8%
Polish zloty <EURPLN=> 4.102 4.115 +0.32% -13.93%
Hungarian forint <EURHUF=> 263.82 263.25 -0.22% -4.34%
Croatian kuna <EURHRK=> 7.243 7.237 -0.08% +1.14%
Romanian leu <EURRON=> 3.924 3.92 -0.1% -9.6%
Serbian dinar <EURRSD=> 85.232 85.14 -0.11% -8.22%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -12 basis points to 163bps over bmk*
5-yr T-bond CZ5YT=RR +1 basis points to +155bps over bmk*
10-yr T-bond CZ9YT=RR -7 basis points to +121bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -13 basis points to +349bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +301bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +257bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0951 CET.
Currency percent change calculated from the daily domestic
close at 1600 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 Jason Hovet; editing
by Tony Austin)
