(Adds details, fixed income)
By Jason Hovet
PRAGUE, Oct 2 (Reuters) - Central European currencies
slipped on Thursday, with dealer citing doubts whether a U.S.
bank bailout will effectively address global credit woes even if
the House of Representatives follows the Senate in approving it.
Emerging assets have been hit by the global credit crunch
which has prompted traders and investors to sell their holdings
of such assets and hoard cash.
"There's a lot of unknown factors still out there, so
people, given the liquidity, seem to be sitting on their hands
to a certain extent," said Stuart Bennett, global foreign
exchange strategist at Calyon.
The Czech crown <EURCZK=> led losses, falling 0.4 percent to
24.638 versus the euro by 0817 GMT, while the Hungarian forint
<EURHUF=> dipped 0.1 percent to 242.96 per euro.
Poland's zloty <EURPLN=> inched down to 3.399 per euro from
3.397 at the previous domestic close and the Romanian leu
<EURRON=> eased 0.4 percent 3.757 against the euro.
"There is not much desire to push these currencies stronger;
there is really not even that much desire to push them weaker,"
Bennett said.
Regional currencies have retreated since mid-September when
U.S. investment bank Lehman Brothers filed for bankruptcy
protection, starting a new phase in the year-old credit crisis.
Late on Wednesday, the U.S. Senate passed a rescue deal, but
investors looked nervously to a vote expected later this week in
the lower house, which surprisingly rejected the plan to buy up
bad debts on Monday.
"The market is set to be very volatile today. It's the
external, global factors that drive the market and the internal
factors are not very important now," said Jan Koprowski, a
Warsaw-based trader at BNP Paribas.
Central European money markets have been little affected by
the turmoil, and central European government officials this week
sought to reassure markets that their countries were insulated
from the financial market crisis.
On Thursday, Hungarian government bonds were little changed
in choppy trade, while Polish and Czech bonds were stable.
Central European currencies have also been hit by evidence
regional economies were slowing due to weaker euro zone demand.
The forint is down 2.3 percent since Sept. 12, the last
trading day before Lehman's filing, while the crown and zloty
are off 2.2 percent in that time.
The Polish government's plans to adopt the euro in 2012 had
turned investors bullish on the currency, given that
preparations for euro entry would likely require tighter
monetary policy.
However, the extent of future rate hikes has been questioned
as regional economies look set to slip more than expected.
The Czechs were the first to reverse policy in August,
cutting interest rates a quarter percentage point in the face of
a weakening economy. On Thursday, Czech officials said the
economy will slow more than previously expected [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.638 24.535 -0.42% +7.02%
Polish zloty <EURPLN=> 3.399 3.397 -0.06% +5.6%
Hungarian forint <EURHUF=> 242.960 242.780 -0.07% +3.91%
Croatian kuna <EURHRK=> 7.110 7.100 -0.14% +2.96%
Romanian leu <EURRON=> 3.757 3.742 -0.4% -4.94%
Serbian dinar <EURRSD=> 76.690 76.632 -0.08% +2.63%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -9 basis points to 17bps over bmk*
5-yr T-bond CZ5YT=RR -21 basis points to -2bps over bmk*
10-yr T-bond CZ9YT=RR -25 basis points to +9bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +277bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +222bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +180bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -7 basis points to +601bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +550bps over bmk*
10-yr T-bond HU10YT=RR -14 basis points to +397bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1048 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Swaha Pattanaik)
