(Updates prices after central bank decisions)
PRAGUE, Sept 25 (Reuters) - The Czech crown led losses in
central Europe as a week of interest rate decisions in the
region gathered pace, pricing in overnight nerves over a U.S.
bailout of markets which on Thursday looked close to completion.
The Czech and Romanian central banks followed Poland by
keeping rates on hold as expected in morning decisions.
The crown <EURCZK=> fell 0.4 percent to 24.432 to the euro
by 1012 GMT, compared with a 0.1 percent loss for Poland's zloty
<EURPLN=>, down at 3.329 per euro.
The Hungarian forint <EURHUF=> was steady at 240.6 per euro.
Hungary's central bank is also seen holding interest rates when
it meets on Sept. 29.
(For details please double click on [])
Romania's leu <EURRON=> fell in early trade, but rebounded
to 3.674 to the euro, or 0.1 percent up, after coming under
pressure on Wednesday when Romania's president hammered the
centrist government for putting 2014 euro adoption plans at
risk.
Global risk appetite eased overnight due to uncertainty over
the $700 billion U.S. bailout but congressional sources said
late on Wednesday that a deal looked near.
The region has been largely insulated from the fallout on
global money markets over the past week, and a Czech central
banker said on Thursday no special measures were needed
([]).
But dealers said the mood was still tense. "Markets are
under pressure," a Prague trader said. "This weekend is key for
the next developments."
Analysts see a crown firmer than 24 per euro as too strong
for the Czech central bank, and the currency fell around 1
percent on Wednesday after flirting with that level for several
days.
The Czech bank (CNB) was the first in the region to cut
interest rates last month as its focus shifted to a slowing
economy, and it is seen easing further after holding fire this
month. That is expected to keep the crown under pressure.
"Today the (expected) CNB no change verdict and dovish
comments should not provide much relief to the (crown)," KBC
analysts wrote in a morning note.
Poland's central bank began a round of regional policy
meetings on Wednesday, holding rates steady but leaving the door
open to the single further rise that markets expect this year.
The zloty eased a touch and on Thursday Polish 5-year and
10-year bonds strengthened early, while 2-year bonds remained
stable.
"It seems the short end of the curve is pricing in one more
rate hike, but investors are not sure whether that would be the
end of tightening cycle," a dealer at a Warsaw-based bank said.
Expectations of further monetary tightening in Poland, where
inflation is nearly double the central bank's target, have been
boosted by the government's decision to push ahead with
sooner-than-expected euro entry.
Poland plans to ready itself for meeting euro adoption
requirements in 2011, with euro zone entry seen a year later.
Slovakia will be the first regional country to adopt euros
in January, while the Czech Republic, Hungary and Romania are
not expected to join until after 2013.
Romanian President Traian Basescu on Thursday warned that
government spending plans before a November election put the
country's euro entry plans and economy at risk [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.432 24.336 -0.39% +7.79%
Polish zloty <EURPLN=> 3.329 3.327 -0.06% +7.54%
Hungarian forint <EURHUF=> 240.610 240.650 +0.02% +4.84%
Croatian kuna <EURHRK=> 7.122 7.112 -0.14% +2.79%
Romanian leu <EURRON=> 3.674 3.678 +0.11% -2.62%
Serbian dinar <EURRSD=> 76.332 76.425 +0.12% +3.08%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -3 basis points to 17bps over bmk*
5-yr T-bond CZ5YT=RR -5 basis points to +4bps over bmk*
10-yr T-bond CZ9YT=RR -8 basis points to +26bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +254bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +201bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +161bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +543bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +498bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +376bps over bmk*
*Benchmark is German bond equivalent.
All currency data taken from Reuters at 1212 CET.
All bond data taken from Reuters at 1034 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 David Stamp)
