(Adds quotes, details, updates prices)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Jan 5 (Reuters) - Central Europe's
currencies traded mixed on Monday, with rate cut expectations
weighing on the Hungarian forint, while the Polish zloty
recovered some of its end-year losses.
In Hungary, the forint <EURHUF=> fell 0.4 percent by 1436
GMT, slightly off earlier lows, with dealers saying bets from
some investors on an extraordinary rate cut at a non-rate
setting central bank meeting were pressuring the currency.
The bank has cut in half an emergency 300 basis point hike
in October and surprised with a reduction at a non-policy
meeting last month.
"If the central bank is determined to lower interest rates,
the price will be a weaker forint, you can't have lower interest
rates and a strong currency," one dealer said.
While policy makers failed to deliver another rate cut
[], further monetary easing in Hungary remains
priced in, the same as in the rest of the region, due to weak
growth outlooks and falling inflation.
Romania holds a rate-setting meeting on Tuesday, but
analysts expect the central bank to ease borrowing costs only in
February [], due to recent leu weakness.
The region's currencies ended 2008 on a sour note when the
global financial turmoil crashed into emerging Europe, wiping
out strong gains from the first half of the year.
But on Monday, the zloty <EURPLN=> shrugged off the region's
weakening pressures and gained 0.7 percent from Friday's levels.
"We've got a new year and more optimistic opening. A
year-end weakening (of the zloty) was caused by a demand on hard
currencies as a result of FX transactions," said a dealer at
Warsaw-based bank.
In Romania, the leu <EURRON=> fell 0.6 percent, while in the
Czech Republic, where a government reshuffle which may include
the appointment of a new finance minister was postponed
[], the crown <EURCZK=> added 0.4 percent.
The Croatian kuna <EURHRK=> firmed 0.9 percent, helped by
the central bank's new mandatory reserve regulation. The Serbian
dinar <EURRSD=>, one of the most assaulted currencies at the end
of last year, was off 0.8 percent.
Regional bond markets were generally quiet on Monday.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.748 26.846 +0.37% +0.02%
Polish zloty <EURPLN=> 4.14 4.171 +0.74% -0.61%
Hungarian forint <EURHUF=> 267.35 266.39 -0.36% -1.44%
Croatian kuna <EURHRK=> 7.299 7.336 +0.5% +0.9%
Romanian leu <EURRON=> 4.056 4.031 -0.62% -1.04%
Serbian dinar <EURRSD=> 90.4 89.67 -0.81% -1.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -5 basis points to 179bps over bmk*
5-yr T-bond CZ5YT=RR -8 basis points to +161bps over bmk*
10-yr T-bond CZ9YT=RR -7 basis points to +119bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -12 basis points to +339bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +287bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +237bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +778bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +724bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +548bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1636 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 and
Marius Zaharia, Editing by...)
